Working Paper: NBER ID: w31926
Authors: Benedict Guttmankenney; Paul D. Adams; Stefan Hunt; David Laibson; Neil Stewart; Jesse Leary
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.
Keywords: credit card debt; nudging; consumer behavior
JEL Codes: G5; H0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| nudged cardholders set autopay amounts only modestly higher than the minimum (G51) | weak response to the nudge (D91) |
| lower manual payments among those enrolled in autopay (J33) | reduced economic impact on credit card debt (G51) |
| nudge designed to deanchor credit card payments from the minimum payment (G51) | reduces autopay enrollment (G52) |
| reduces autopay enrollment (G52) | does not significantly decrease credit card debt after seven payment cycles (G51) |
| nudge designed to deanchor credit card payments from the minimum payment (G51) | changes enrollment behavior (I24) |
| lower enrollment in autopay (G52) | more missed payments (G33) |