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My question concerns the first two paragraphs of the text. Isn't the author falsly equating causation(austerity e.t.c leads to pathological lending patterns) with correlation( countries which display more austerity e.t.c will have more pathological lending patterns)?

edit: I am specifically refering to the part where he says that for the theory to be correct there must be some differences in pathological lending patterns among the countries

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edit: After reading the text again my problem now is more that I don't really understand what exactly the author is saying. When he refers to the observable implications required for the theory to fit together what theory is meant?

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    $\begingroup$ Welcome to the site! Please can you actually quote from the linked text. It is not within the spirit of this site to have part of the question only accessible via a link. $\endgroup$
    – Robert Long
    Dec 8, 2018 at 19:09
  • $\begingroup$ Welcome to CV, Jagol95. @RobertLong makes a very good point. You can edit your question to follow this advice by clicking the "edit" link at the lower left of your question. $\endgroup$
    – Alexis
    Dec 8, 2018 at 19:12

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From my reading, the author does not talk about austerity, but about different saving behavior in US/UK compared to other countries. I think you are right in pointing to the fact that it might not be the political economy / the design of the economy / the lack of regulating institutions which cause people to get indebted easily. More likely, both is a result and a cause of some deeper cultural identities. Whether the author claims the causal link you are citing, I'm not so sure however.

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  • $\begingroup$ Ok. So the hypothesis is that people in Anglophone countries are more likely to respond to these factors( rising inequality, cutting of welfare programs) with increased borrowing to maintain their standard of living right? I still don't see why this necessitates differences in borrowing behaviour among different countries. $\endgroup$
    – Jagol95
    Dec 8, 2018 at 20:08
  • $\begingroup$ I'd rather say people in Anglophone countries are willing to make debt per se, which is the difference in borrowing behavior. $\endgroup$
    – E. Sommer
    Dec 8, 2018 at 20:11
  • $\begingroup$ Oh. But isn't he trying to give an example of extracting a measurable consequence of some hypothesis? So in this case the hypothesis is that these different countries have different borrowing behaviour and the measurable consequence is that these different countries must have different borrowing behaviour? $\endgroup$
    – Jagol95
    Dec 8, 2018 at 20:17

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