Replication data for: How Do Individuals Repay Their Debt? The Balance-Matching Heuristic
Principal Investigator(s): View help for Principal Investigator(s) John Gathergood; Neale Mahoney; Neil Stewart; Jörg Weber
Version: View help for Version V1
| Name | File Type | Size | Last Modified |
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| data | 12/07/2019 08:25:AM | ||
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text/plain | 14.6 KB | 12/07/2019 03:25:AM |
Project Citation:
Gathergood, John, Mahoney, Neale, Stewart, Neil, and Weber, Jörg. Replication data for: How Do Individuals Repay Their Debt? The Balance-Matching Heuristic. Nashville, TN: American Economic Association [publisher], 2019. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116207V1
Project Description
Summary:
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We study how individuals repay their debt using linked data on multiple credit cards. Repayments are not allocated to the higher interest rate card, which would minimize the cost of borrowing. Moreover, the degree of misallocation is invariant to the economic stakes, which is inconsistent with optimization frictions. Instead, we show that repayments are consistent with a balance-matching heuristic under which the share of repayments on each card is matched to the share of balances on each card. Balance matching captures more than half of the predictable variation in repayments and is highly persistent within individuals over time.
Scope of Project
JEL Classification:
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D14 Household Saving; Personal Finance
D15 Intertemporal Household Choice; Life Cycle Models and Saving
D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
G41 Behavioral Finance: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
D14 Household Saving; Personal Finance
D15 Intertemporal Household Choice; Life Cycle Models and Saving
D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
G41 Behavioral Finance: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
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