Americans, they have so much debt. They have so few affordable housing options. They have such spotty retirement-savings programs.

So much, so few, but is it any worse than anywhere else? Other rich nations keep good records of similar statistics, enabling researchers to answer an important question: Which financial habits are American anomalies, and which are present in nearly every other developed country? Or, to put the question in a less exceptionalist way: What is it about certain countries’ economies that encourage some tendencies while stifling others?

As economists have studied the habits of households around the world, they’ve found two personal-finance patterns that are virtually universal in the developed world. The first is that across countries, higher income, wealth, and education are associated with investing in the stock market. And the second is that people make the wisest financial decisions after they emerge from early adulthood and before they grow old.

But, when it comes to households’ financial ledgers, there are a number of “mysterious differences across countries,” in the words of the economist Cristian Badarinza of the National University of Singapore, who along with two co-authors recently published a National Bureau of Economics working paper on the topic. These international differences matter a lot, because they can point to how different nations’ regulations and even cultural norms shape residents’ finances, which informs, as Badarinza and his co-authors write, an effort “to identify global ‘best practices.’”

Take debt, for instance. The paper documents that about 75 percent of American households carry some form of debt, and Canada, the U.K., and Australia are in the same neighborhood. However, in France, Spain, and Germany, only about half of households are in debt. The rate is even lower in Italy.



What causes this? Economists have offered their standard explanation, arguing that international variations in banking regulations and mortgage taxation have incentivized different behaviors. But, taking a more sociological approach, other economists believe that there are cultural beliefs at play too, given that some cultures stigmatize debt, while others accept it.

Another unfortunate category the U.S. finds itself leading is credit-card debt. The countries that were in the same league as America when it came to the likelihood that any given household was in debt—such as Canada and the U.K.—have much lower rates of credit-card debt than the U.S. Nearly 40 percent of American households have credit-card debt; countries such as Italy and Spain have percentages in the single digits.



One statistic that shows a bit more consistency across countries is the fraction of households that own their house or condo. In wealthier European countries, a standard homeownership rate is somewhere in the mid-60-percent range, with the Spanish nearing 83 percent. (The one European exception was Germany, where nearly 60 percent rent instead of buy.)



Perhaps more interesting than how many Europeans own houses is the varying frequency with which they pack up and change residences. One 2014 study found that households in Scandinavia and the rest of Northern Europe moved an average of five to seven times in their lifetimes, while residents of Spain, Italy, and the rest of Southern Europe tended to move less than three times. (The elderly populations of Greece, Poland, and the Czech Republic averaged only one move throughout their entire lives.) The researchers attributed these variations to economic policies, but also to social forces such as rates of divorce and widowhood.

Badarinza and his colleagues’ review of the personal-finance literature pointed to another truth that was even more consistent across borders: People are terrible at investing, and are much worse at it than they think they are.

Personal-finance researchers are a group obsessed with mistakes: They often have an ideal behavior in mind—one that would leave a household better off in the long run—and then observe how people deviate from it. One common way they deviate is by over-investing in publicly-traded stocks (which can be risky), and under-investing in mutual funds (which are built to mitigate risk).

In a number of wealthy countries, Badarinza and his colleagues found that pattern to hold. In Australia, where the gap between stocks and mutual funds was the widest, about 35 percent of households invested directly in stocks, while only 3 percent invested in mutual funds. The gap was narrower, but still very much present, in the U.S. and the U.K. (though Germany and Finland were notable in that their residents are more likely to invest in mutual funds than stocks.)

Why do these sorts of differences—in debt, in homeownership rates, in investing—exist? The standard answer is that it comes down to differences between countries’ institutions and regulations. One study, for instance, found that the quality of a country’s government correlated negatively with how much its mutual-fund managers gouged their customers with fees. More concretely, international variation in retirement savings can have a lot to do with whether a country has a good portion of its workers participating in pensions, defined-benefit plans, or no formal retirement plan at all.

But another factor that researchers have suggested plays a role in determining cross-country variation is culture—specifically, a culture’s comfort with putting trust in entities larger than local communities. This sort of trust has been shown to have deep roots that go back to a country’s governance structure throughout history, and might make some people more likely to open a bank account or invest in the stock market. For example, religious households consider themselves more trusting, and are more likely to put their faith in banking institutions by opening an account. Similarly, right-wing voters have been shown to trust in the power of markets, which might explain why they’re more likely to invest in stocks than liberals. Cultural norms have lasting power: When households emigrate from one country to another, economists have documented that they tend to stick to the investment tendencies of their home country and take a while to adopt new ones.

Arguments grounded in economics and those grounded in anthropology are both persuasive, and it’s hard to tell where responses to economic incentives end and culture begins. These two forces are difficult (perhaps impossible) to disentangle, but researchers are at least starting to get a more comprehensive grasp on why, say, so many Spaniards own their homes, or why Scandinavians tend to move so many times.