Doctoral Dissertation Research: Moral and Ethical Understandings of Risk, Investment and Financial Loss Following Financial Crises

Regents Of The University Of Michigan - Ann Arbor, Ann Arbor MI

Investigators

Abstract

Financial bubbles are known for the sustained socioeconomic impacts that they can have on communities. In an attempt to prevent them as well as minimize the damage that the bursting of such bubbles cause, social scientists have attempted to understand the moral and ethical factors that motivate the assumption of unusual risks, as well as propensities for the repayment of debt. This project, which trains a graduate student in how to conduct rigorous, empirically-grounded scientific fieldwork, asks how those impacted by financial crises make moral and ethical sense of risk, investment, and financial loss in their economic recovery efforts. The research will produce data important in the evaluation and resolution of financial crises. Andrew Haxby, under the supervision of Dr. Thomas Fricke of the University of Michigan at Ann Arbor, will explore how the collapse of financial bubbles influence understandings of morality, honor and kinship within their homes and communities. The research seeks to understand this relationship by exploring a housing bubble collapse in Kathmandu, Nepal from 2007 to 2011, when numerous families in the city assumed large debts in order to participate in the booming real estate market. The research takes place in Kathmandu, which is an appropriate social laboratory because it has undergone rapid urban development in the last decade, prompting various credit options for households. Families are commonly held responsible for the debts of all their members, yet creditors do not always agree on who they consider to be part of a given family, or even what constitutes responsible behavior for households facing default. Consequently, families in default must navigate between contradictory understandings of households and perceptions of responsible behavior. Yet these differences can be a boon as well as a burden. By moving their debt between creditors, and their assets between kin, families make it possible to improve their financial position, even if only temporarily. Thus, the project examines how these families are able to maneuver their way towards financial stability, hypothesizing that a family's ability to do this successfully hinges on whether or not they are able to present themselves as honorable to their creditors. The research will rely on ethnographic methods (participant observation of carefully selected informants, semi-structured interviews, and financial diaries) and socio-spatial mappings of local credit markets and household financial decision-making structures. In this way, not only does this project explore debt and families in Kathmandu, it also explores how a housing bubble changes culturally specific values. The research findings will further discussions on the anthropology of debt and ethics as well as understanding the rationales informing household financial decision-making.