The Review of Economics and Statistics Vol. 108 No. 1 2026
Inequality, Relative Deprivation, and Financial Distress: Evidence from Swedish Register Data
Abstract
Several studies have linked rising insolvency rates to increasing inequality and argued that this might be explained by individuals’ desire to “keep up with the Joneses.” Using unique administrative register data on individual insolvencies in Sweden, I test whether the probability to become insolvent is related to one’s income distance relative to peers. Identification relies on area fixed effects, an extensive set of background characteristics, and varying the definition of the relevant reference group. I find that higher inequality increases the individual’s probability to become insolvent and that this effect is primarily driven by men.
- DOI
- 10.1162/rest_a_01364
- Volume
- 108
- Issue
- 1
- Pages
- 16-29
- Language
- en
- Sources
- openalex crossref