Can “living in the present” be a bad thing?

.

Some individuals borrow extensively on their credit cards. This paper tests whether present biased time preferences correlate with credit card borrowing. In a field study, we elicit individual time preferences with incentivized choice experiments, and match resulting time preference measures to individual credit reports and annual tax returns. The results indicate that present-biased individuals are more likely to have credit card debt, and have significantly higher amounts of credit card debt, controlling for disposable income, other sociodemographics, and credit constraints.

Source: “Present-Biased Preferences and Credit Card Borrowing” from IZA Discussion Paper No. 4198, May 2009 

Join 25K+ readers. Get a free weekly update via email here.

Related posts:

What 10 things should you do every day to improve your life?

What do people regret the most before they die?

What five things can make sure you never stop growing and learning?

Share

Subscribe to the newsletter