The typology of debt
Demos is carrying out an innovative piece of research and analysis developing a new typology of personal debt.
We will move away from industry-led product definitions, and develop a ‘bottom up’ typology – defining different types of debt by their ‘real life’ impact: how they are perceived by, used by and affect people day to day.
People experiencing debt (and practitioners working to support routes out of debt) will intuitively differentiate between different types of debt – and will view some types as more problematic than others. But a framework which defines debt by the products generating them (mortgage, credit card, loan etc), rather than on how they affect people, might be preventing the most effective solutions from being applied more innovatively.
When a practitioner talks about some debt being worse than others, what does ‘worse’ mean? Is it simply the difference between secured and unsecured debt? Or is it, in fact, a combination of ability to repay, the implications of not repaying, and subjective factors – such as how the debt is perceived and the impact this has on people’s social networks, mental health and wellbeing?
This project will answer this question, developing a new way of conceptualising debt based on its impact, rather than on industry definitions. A new ‘real life’ typology might lead to a range of more innovative, ‘real world’ solutions being developed or existing solutions being applied in different ways.
Methodology
The project will include workshops with practitioners from debt and benefits advice services, homelessness and other support charities to help develop the indicators used to assess different types of debt; focus groups around the country with people currently in debt or with experience of a variety of types of debt, from different backgrounds (older and younger people, different income levels, ethnic backgrounds, employment status, with and without children, etc.); polling of the public; and reviews of innovative good practice in tackling debt.
This field work will give us a rich source of data with which to analyse debt by its impact on and treatment by those with first hand experience, rather than simply by product delineation or technical differences (eg secure vs insecure). Demos will then use this information to develop a “typology of solutions” - matching solutions to different debt-related needs based not just on the form of debt (eg credit card, loan) but tailored to the facets of that debt – e.g. its impact on mental health or resilience.
The project is supported by the Barrow Cadbury Trust.
The final report will be launched in March 2014.
For more information please contact Jo Salter at jo.salter@demos.co.uk.