Utah has actually dropped from the highest bankruptcy rate in the nation to third place. Big deal. It looks more like this is due to Indiana’s and Ohio’s economic difficulties (manufacturing downturns) and Utah’s booming economy than due to a sudden surge in our citizens’ fiscal responsibility. 2005 bankruptcy numbers were somewhat skewed, since many filed to take advantage of old consumer friendly laws before new laws went into effect. Still, it’s clear that Utah still has a major problem.
Last year I wrote about this issue here. The unnamed economists cited in Anderton’s article (although I have heard local economists—even ones from BYU—repeat these things with my own ears) appear to be making faulty connections when they claim that higher than average charitable donations are a significant factor in Utah’s higher than average bankruptcy rate. The implication is that people get into financial trouble partially because they are LDS and pay tithing.
Let’s make this quite clear. No one can cite any empirical evidence to back this up. While Mormons certainly do file bankruptcies, it’s not the full tithepayers (people that pay 10% of their income annually to the church) that are filing. After studying the numbers, I concluded in last year’s post that the following things are known about Utah’s high bankruptcy rate:
- Utah’s high bankruptcy rate is artificially inflated somewhat by those that first attempt to take responsibility for their problems before giving up.
- Most bankruptcies in Utah are filed by people that choose not to fully participate in the LDS Church.
- Some members of the LDS Church have some strange financial ideas based on Mormon folklore rather than on actual LDS doctrine. Perhaps this is more common among those that don’t fully participate.
- Given the below average household income, larger than average family size may stretch some families to the point of default on obligations when unusual financial events occur.
The Standard Examiner editors have it right when they explain here how to avoid bankruptcy:
“Don't be tempted into using high-interest-rate credit cards for anything but an absolute emergency, live in a home or apartment you can afford, drive a car that's economical to own and operate, and generally live within your means -- which means spending on a level that allows you to save money from month to month, as well.”Now, if we can just get Utah citizens to go along with that.