How Do Individuals Repay Their Debt? The Balance-Matching Heuristic

• 成果类型: Article
• 署名作者: Gathergood, John; Mahoney, Neale; Stewart, Neil; Weber, Jorg
• 署名单位: University of Nottingham; University of Chicago; University of Warwick
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20180288
• 发表日期: 2019
• 页码: 844-875
• 关键词: credit; diversification; management; liquidity; BIAS; LAW

摘要

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-matchingheuristic 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.