Household finance—the normative and positive study of how households use financial markets to achieve their objectives …

different average returns on their net worth (a standard deviation of 8.6%) and on its components. Second, heterogeneity in … heterogeneity in sophistication and financial information, as well as entrepreneurial talent. Finally, wealth returns are correlated …

We use survey data to study American households' propensity to default when the value of their mortgage exceeds the … defaults are strategic. We also find that no household would default if the equity shortfall is less than 10% of the value of … the house. Yet, 17% of households would default, even if they can afford to pay their mortgage, when the equity shortfall …