Present-Biased Preferences and Credit Card Borrowing

Meier, Stephan; Sprenger, Charles

doi:10.1257/app.2.1.193

Cited by 570 publications

(538 citation statements)

References 24 publications

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“…8 Our findings in this regard resonate with those of Meier and Sprenger (2010), but stand in contrast to those of Dean and Sautmann (2016) and Carvalho, Meier, and Wang (2016).…”

Section: Introductionsupporting

confidence: 62%

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How Soon Is Now? Evidence of Present Bias from Convex Time Budget Experiments

Balakrishnan¹,

Haushofer²,

Jakiela³

2017

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“…8 Our findings in this regard resonate with those of Meier and Sprenger (2010), but stand in contrast to those of Dean and Sautmann (2016) and Carvalho, Meier, and Wang (2016).…”

Section: Introductionsupporting

confidence: 62%

“…See Coller and Williams (1999) for an early discussion of the issue. Meier and Sprenger (2010) find little evidence that experimentally-measured discount rates are predicted by liquidity constraints outside of the lab.…”

Section: Experimental Designmentioning

confidence: 88%

How Soon Is Now? Evidence of Present Bias from Convex Time Budget Experiments

Balakrishnan¹,

Haushofer²,

Jakiela³

2017

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“…Meier and Sprenger (2010) show that those who voluntarily participate in financial education programs are more future-oriented. Hastings and Mitchell (2011) find that those who show patience in an experiment also have a higher propensity to save additional amounts for retirement in their pension accounts.…”

Section: Sources Of Endogeneitymentioning

confidence: 97%

Financial literacy, financial advice, and financial behavior

2017

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In this survey, we review the voluminous body of literature on the measurement and the determinants of financial literacy. Wherever possible, we supplement existing findings with recent descriptive evidence of German households' financial literacy levels based on the novel Panel on Household Finances dataset, a large-scale survey administered by the Deutsche Bundesbank and representative of the financial situation of households in Germany. Prior research not only documents generally low levels of financial literacy but also finds large heterogeneity in financial literacy across the population, suggesting that economically vulnerable groups are placed at further disadvantage by their lack of financial knowledge. In addition, we assess the literature evaluating financial education as a means to improve financial literacy and financial behavior. Our survey suggests that the evidence with respect to the effectiveness of the programs is rather disappointing. We also review the role of individuals' financial literacy for the use of professional financial advice and assess whether expert intervention can serve as a substitute to financial literacy. We conclude by discussing several directions for future research.

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“…Empirical evidence shows that individual time preferences are correlated with credit card borrowing and debt maturity choice (Meier & Sprenger, 2010;Breuer et al, 2014). In a Diamond-type overlapping generations model, Buiter (1981) shows that the country with a higher discounting rate runs a current account deficit.…”

Section: Credit Ratingmentioning

confidence: 99%

How Time Preferences Differ: Evidence from 45 Countries

2010

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We present results from the first large-scale international survey on time preference, conducted in 53 countries. All countries exhibit hyperbolic discounting patterns, i.e., the immediate future is discounted more than far future. We also observe higher heterogeneity for shorter time horizons, consistent with the pattern reviewed by Frederick, Loewenstein, and O'Donoghue (2002). Cultural factors as captured by the Hofstede cultural dimensions (Hofstede, 1991) contribute significantly to the variation of time discounting, even after controlling for economic factors, such as GDP, inflation rate and growth rate. In particular, higher levels of Uncertainty Avoidance are associated with stronger hyperbolic discounting, whereas higher degrees of Individualism and Long Term Orientation predict stronger tendency to wait for larger payoffs. We also find the waiting tendency is correlated with innovation, environmental protection, crediting rating, and body mass index at country level after controlling for county wealth. These results help us to enhance the understanding of differences across financial markets and economic behavior worldwide.

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Present-Biased Preferences and Credit Card Borrowing

Cited by 570 publications

References 24 publications

How Soon Is Now? Evidence of Present Bias from Convex Time Budget Experiments

How Soon Is Now? Evidence of Present Bias from Convex Time Budget Experiments

Financial literacy, financial advice, and financial behavior

How Time Preferences Differ: Evidence from 45 Countries

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