Present-biased preferences and credit card borrowing

Arbeitspapier

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 have significantly higher amounts of credit card debt, controlling for disposable income, other socio-demographics, and credit constraints.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 4198

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Household Saving; Personal Finance ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Field Experiments
• Subject: Time preferences ; dynamic inconsistency ; credit card borrowing ; field experiment ; Private Verschuldung ; Kreditkarte ; Konsumentenverhalten ; Zeitpräferenz ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Meier, Stephan ; Sprenger, Charles D.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/35670
• URN: urn:nbn:de:101:1-20090615131
• Last update: 10.03.2025, 11:42 AM CET