Scarcity and consumers’ credit choices

نویسندگان

چکیده

We study the effect of scarcity on decision making by low income Swedes. exploit random assignment welfare payments to their borrowing decisions within pawn and mainstream credit market. document that higher educated borrowers borrow less frequently choose lower loan value ratios when budget constraints are exogenously tighter. In contrast, low-educated do not respond temporary elevated levels scarcity. This lack response translates into a significantly probability default an 11.6% increase in cost. show difference access liquidity and/or buffer stocks cannot explain our results. Instead framework, where awareness self-control problems is positively correlated with education can high-educated consumers LTV as commitment device likelihood repay. Analogously, future problems, tie themselves mast thus ignore consequences focusing solving acute problems. Our findings highlight increased risk reinforcing conditions poverty through overborrowing.

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ژورنال

عنوان ژورنال: Theory and Decision

سال: 2021

ISSN: ['1573-7187', '0040-5833']

DOI: https://doi.org/10.1007/s11238-021-09815-2