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Present-Biased Preferences and Credit Card Borrowing

Stephan Meier () and Charles Sprenger

American Economic Journal: Applied Economics, 2010, vol. 2, issue 1, 193-210

Abstract: 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. (JEL D12, D14, D91)

JEL-codes: D12 D14 D91 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/app.2.1.193
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American Economic Journal: Applied Economics is currently edited by Alexandre Mas

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