Payday Lending and the Opioid Epidemic

Abstract

Using the variation in payday lending access generated by state statutes allowing or prohibiting payday lending, I find that allowing payday lending increases opioid-related mortality rates by about 32% of its mean, which amounts to 26 additional lives lost per 100,000 population every year. The results are robust after controlling for the county- and state-level socioeconomic conditions, and unlikely to be driven by confounding events, the time trend, or systematic differences between states allowing and prohibiting payday lending. Furthermore, the effect is more pronounced in areas with low socioeconomic status.