Debt Aversion and the Wealth of the Poor

15:40-17:00, Friday, October 16, 2026

I-206, Boxue Building

Dr. Xincheng QIU is an Assistant Professor of Economics at Guanghua School of Management, Peking University, and the Deputy Director of the Institute of Economic Policy Research at Peking University. In 2024, he was awarded the Excellent Young Scientists Fund (Overseas) by the National Natural Science Foundation of China. He received Ph.D. in economics from the University of Pennsylvania and obtained his master's and bachelor's degrees from Peking University. His research interests include Macroeconomics, Labor Economics, Firm Dynamics, and Economic Development. His research has been published in the Review of Economic Studies, Journal of Monetary Economics (x2), Journal of Political Economy Macroeconomics, Economic Journal, and International Economic Review. He has won the Best Junior Scholar Paper Award at the China International Conference in Macroeconomics twice, the Rising Star Award and the Gregory Chow Best Paper Award from the Chinese Economists Society, as well as the Dissertation Prize and the Dean's Scholar from the University of Pennsylvania.

We document debt aversion and provide evidence that it has cultural origins. Within the United States, households with East Asian ancestry hold less debt despite facing no worse access to credit. Within China, greater historical Confucian exposure is associated with less borrowing, conditional on local credit conditions. Motivated by this evidence, we introduce a nonpecuniary cost of debt into a heterogeneous-agent model calibrated to Chinese household data. The model reproduces key features of the liquid-wealth distribution, particularly the small share of households with negative wealth and the substantial positive wealth held by the bottom half. We use the model to compare the effects of loosening borrowing limits with weakening debt aversion.

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