Misfortune or Misdeed: An Empirical Study of Public Attitudes Towards Personal Bankruptcy

Abstract

To date, academic and political debates over ‘bankruptcy stigma’ have seldom been based upon empirical evidence. This article outlines the first scholarly empirical study of attitudes to bankruptcy to be carried out in any jurisdiction. Drawing on a survey of 2,000 Australians, it finds that respondents tend to associate bankruptcy with greedy and dishonest corporate businessmen. Yet while the study finds that bankruptcy arouses considerable public disapproval in Australia, it also finds evidence of widespread sympathy for individuals who go bankrupt due to unemployment, illness or other unforeseeable events. These findings illustrate the limitations of the concept of ‘bankruptcy stigma’, with its connotations of unqualified alienation and contempt. The article suggests that the term, ‘shame’, offers a more nuanced account of the way in which bankruptcy commands public sympathy, even as it elicits equally strong feelings of disapproval.

Keywords: bankruptcy, personal insolvency, stigma