Lucia F. Dunn

NEW EVIDENCE ON CREDIT CARD BORROWING AND REPAYMENT PATTERNS

A new dataset allows researchers to examine patterns of credit card use for both borrowing and payoff. This article addresses changes in these behaviors for different birth cohorts by estimating cohort‐adjusted age profiles for debt and payoff rates based on a time series of cross sections. Younger consumers are found to be borrowing more heavily and repaying at lower rates than older generations. The accumulation of credit card debt is found to continue over the lifecycle. This has implications for recent changes in laws governing the credit card industry. Increases in minimum required payment rates are examined and are found to increase actual payoff rates more than proportionately.

Credit card debt and consumption: evidence from household-level data

This research investigates the relationship between credit card debt and consumption using household level data. This is a departure from the previous studies which have used aggregate measures of consumption and general debt such as the Debt Service Ratio or total revolving credit. We use a detailed monthly survey of credit card use to impute credit card debt to respondents from the Consumer Expenditure Survey sample. In contrast to some earlier studies using aggregate data, we find a negative relationship between debt and consumption growth. Our work shows that a

Is Combat Pay Effective? Evidence from Operation Desert Storm*

1000 increase in credit card debt results in a decrease in quarterly consumption growth of almost 2%. Investigations are also made into effects of debt within different age categories and into the impact of expected income growth on the debt–consumption relationship.

CONSUMER DEBT STRESS, CHANGES IN HOUSEHOLD DEBT, AND THE GREAT RECESSION: DEBT STRESS AND THE GREAT RECESSION

To determine whether combat pay for U.S. Army officers has been adequate to maintain troop strength during wartime in the all-volunteer military. Copyright (c) 2003 by the Southwestern Social Science Association.

Introductory Credit Card Offers and Balance Switching Behavior of Cardholders

This research examines psychological debt stress and changes in household debt holdings for consumers during the Great Recession using data from a monthly national U.S. household survey covering the period 2006 through 2012. Debt stress measures in the population rose by over 50% at the bottom of the recession. Determining relative stress for eight different types of household debt, we find that noncollateralized debts are more stressful than collateralized debt and that during the recession the composition of debt shifted away from collateralized debt and toward noncollateralized. Our empirical results show that women and Hispanics experienced higher measured levels of stress.

The Impact of Credit Checks on Employment

American consumers carry over

A Race Against the Clock: Auctioneer Strategies and Selling Mechanisms in Live Outcry Auctions

800 billion in unpaid credit card balances.1 With several thousand banks issuing credit cards today, the effort to lure these cardholders has become increasingly competitive. One of the most common business practices in this industry is the use of the introductory offer with a “teaser” interest rate below the going market rate for a fixed period of time. Frequently the low-rate offers will be connected to a transfer of balances from another account. The phenomenon of introductory rates and balance switching has become very important in this industry, and it has been estimated that around 5 billion direct solicitations go out annually, almost 4 solicitations per month per American household.2 This aggressive marketing behavior by banks is credited with increasing competition in the credit card market and the drop in average interest rates that occurred throughout the 1990s. In principle, a strategic consumer can avoid paying high interest rates by taking advantage of these offers. However, not all consumers revolving on credit cards are taking these introductory offers, and it is important to understand the behavior involved in this decision.

Social economics: where has it gone?

Data from a nationally representative sample are used to examine the link between credit scores, frequently used for job screening, and the probability of employment. This freely available survey contains information which closely approximates a standard FICO score. We model the probability of employment as a function of the approximated credit score and other variables, adjusting for endogeneity. A 10-point decrease in the approximated credit score is associated with a 1.35% decrease in probability of employment. Detail on the construction of the credit score provides a framework for other researchers whose investigations would benefits from indicators of credit worthiness.

Empirical Investigation of Credit Card Default

Using data from an original survey of practicing auctioneers, this paper examines the effect of binding time constraints on the auctioneer’s selling strategy in an outcry auction. We present a time-allocation model in which the length of time allocated to the sale of an item must be traded off against its realized price. This is applied to (1) the relationship between time allocation and the ex ante value of an item; (2) the effect of the reported variation over time of the number of bidders present, on both the time allocation and the order in which items of differing value are presented for sale; and (3) the auctioneer’s use of various bidding processes, such as batching and selling by choice, from the perspective of the auctioneer’s time-revenue tradeoff. Our results corroborate and provide theoretical underpinning for observed auctioneer behavior.

BANK COMPETITION AND CONSUMER SEARCH OVER CREDIT CARD INTEREST RATES

Reports statistics that show that the number of economics majors in the USA achieved a peak in 1989‐90 but had declined by 11 percent by 1993 and experienced further 8.8 percent drop from 1992‐93 to 1993‐94 while at the same time the number of overall Bachelor’s degrees granted in all fields climbed steadily. Examines the possible causes for this decline in numbers and explores two possible outcomes and their effects on the discipline of economics.