I Will Pay Tomorrow, or Maybe the DayrnAfter. Credit Card Repayment, PresentrnBiased and Procrastination

摘要

Procrastinating the repayment in full on a month-to-month balance inrncredit card debt is a problem affecting a large segment of the population.rnThis paper studies the role that present-biased preferences andrnimpatience play in the repayment behaviour of consumers. Evidencernfrom a field study using a sample of 380 college students providesrnempirical support to the hypothesis that individuals with present-biasedrnpreferences tend to adopt a strategic procrastination repaymentrnbehaviour that is not optimal to accomplish repayment in full. Morernspecifically, individuals suffering from self control issues and using creditrncards to bridge unexpected shortage of income are more likely to fail tornrepay credit cards in full in the period after the purchase was completed,rntherefore, carrying over a month-to-month balance. In addition, peoplernwith a simple present-biased revealed effect are also more likely to fallrnbehind on credit card repayment, vis-u0001a-vis those that have a higherrnmarginal propensity to save. By the same token, we find that individualsrnconsistently behave inconsistently, that is evidence from our samplernindicates the predominance of dynamically inconsistent preferences, inrnopposition to the prescriptions of the neoclassical theory. In this regard,rnthe na€ıve type of individuals with present-bias preferences consumernbeyond their income capabilities and are much more likely to carry overrncredit card debt into the next period, vis-u0001a-vis individuals that are morernsophisticated.