How does one reconcile the fact that bankruptcies in the United States have skyrocketed at a time of extraordinary prosperity? Some blame lenders for issuing too many credit cards. But economists David B. Gross of Lexecon Inc. and Nicholas S. Souleles of the Wharton School say it is because there is less “social stigma” attached to reneging on debts and leaving creditors holding the bag. In a paper delivered to the American Economic Association’s annual meeting in January 2001, they said:
Souleles concludes that perhaps “the scarlet letter associated with bankruptcy is disappearing.”
Source: Charles J. Whalen, Economic Trends: Bankruptcy? So What? Business Week, February 19, 2001.
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