Replication data for: Borrowing on the Wrong Credit Card? Evidence from Mexico

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Project Citation:

Ponce, Alejandro, Seira, Enrique, and Zamarripa, Guillermo. Replication data for: Borrowing on the Wrong Credit Card? Evidence from Mexico. Nashville, TN: American Economic Association [publisher], 2017. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-06. https://doi.org/10.3886/E116137V1

Project Description

Summary: We establish new facts about the way consumers allocate debt among their credit cards using data for a representative sample of cardholders in Mexico. We find that relative prices are weak predictors of the allocation of debt, purchases, and payments. Consumers allocate a large fraction of their debt to high-interest cards, incurring a cost of 31 percent above the minimum. Using an experiment, we find that consumers do not substitute in the price margin, although they respond to salient temporary low-interest offers. We conclude that limited attention and mental accounting best rationalize our results and discuss implications for the market.

Scope of Project

JEL Classification:
      D14 Household Saving; Personal Finance
      G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
      O12 Microeconomic Analyses of Economic Development
      O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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V1 [2019-12-06]

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