Work

The Semblance of Success in Nudging Consumers to Pay Down Credit Card Debt

Year: 2023

Type: report

Abstract: We run a field experiment and a survey experiment to study an active choice nudge.Our nudge is designed to reduce the anchoring of credit card payments to the minimum payment.In our field experiment, the nudge reduces enrollment in Autopaying the minimum from 36.9% to 9.6%.However, the nudge does not reduce credit card debt after seven payment cycles.Nudged cardholders tend to choose Autopay amounts that are only slightly higher than the minimum payment.The nudge lowers Autopay enrollment resulting in increasing missed payments.Finally, the nudge reduces manual payments by cardholders enrolled in Autopay.

Source: National Bureau of Economic Research

DOI: 10.3386/w31926

Authors: Benedict Guttman-Kenney, Paul Adams, Stefan Hunt, David Laibson, Neil Stewart, Jesse Leary

Institutions: University of Chicago, Innovations for Poverty Action, Harvard University, University of Warwick, Amazon (United Kingdom)

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: green

Funders: Harvard University, Leverhulme Trust, Economic and Social Research Council

Awards: The Network for Integrated Behavioural Science - The Science of Consumer Behaviour, G2200362534, Accumulating to choose, but accumulating what? Drift diffusion modelling of economic preference, G3678697519, Network for Integrated Behavioural Science, G6128599341, G7050801856, G7342147324, G8579886662

OpenAlex ID: W4389580036

Cites: 49

Cited by: 8

Related to: 10