The Opportunity Cost of Debt Aversiont

• 成果类型: Article
• 署名作者: Martinez-Marquina, Alejandro; Shi, Mike
• 署名单位: University of Southern California; Stanford University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20221509
• 发表日期: 2024
• 页码: 1140-1172
• 关键词: Student loans; PSYCHOLOGY; RISK; Heterogeneity; experiences; motivation

摘要

We provide evidence of the existence of debt aversion and its negative implications for financial decisions. In a new experimental design where subjects are assigned debt randomly, we quantify the opportunity cost of subjects' debt-biased decisions. One-third of our participants neglect high returns and focus instead on debt repayments. In addition, borrowing to invest is 50 percent less likely when it leads to indebtedness. On average, participants perceive $1 less in debt as equivalent to $1.03 in savings. Hence, a debt-averse agent will undertake a 10 percent guaranteed investment only if the cost of bor