Present-Biased Preferences and Credit Card Borrowing

Some individuals borrow extensively on their credit cards. This paper tests whether present-biased time preferences correlate with credit card borrowing. In a field study, we elicit individual time preferences with incentivized choice experiments, and match resulting time preference measures to indi...

Full description

Saved in:
Bibliographic Details
Published in:American economic journal. Applied economics 2010-01, Vol.2 (1), p.193-210
Main Authors: Meier, Stephan, Sprenger, Charles
Format: Article
Language:English
Subjects:
Aggregates
Behavior
Behavioral economics
Bias
Borrowing
Central banks
Charge accounts
Consumer behavior
Consumption
Credit cards
Credit reports
Debt
Demographics
Discounts
Economic models
Economic theory
Economics
Experiments
Interest rates
Measurement techniques
Personal debt
Personal finance
Preferences
Price lists
Revolving
Revolving credit
Self report
Social biases
Sociodemographics
Studies
Tax payments
Tax returns
Time series
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Some individuals borrow extensively on their credit cards. This paper tests whether present-biased time preferences correlate with credit card borrowing. In a field study, we elicit individual time preferences with incentivized choice experiments, and match resulting time preference measures to individual credit reports and annual tax returns. The results indicate that present-biased individuals are more likely to have credit card debt, and to have significantly higher amounts of credit card debt, controlling for disposable income, other socio-demographics, and credit constraints.
ISSN:1945-7782
1945-7790
DOI:10.1257/app.2.1.193