List randomization for sensitive behavior: An application for measuring use of loan proceeds

Policymakers and microfinance institutions (MFIs) often claim to target poor entrepreneurs who then invest loan proceeds in their businesses. Typically in non-research settings these claims are assessed using readily available but unverified self-reports from client loan applications. Alternatively, independent surveyors could directly elicit how borrowers spent their loan proceeds. That too, however, could suffer from deliberate misreporting. We use data from the Peru and the Philippines in which independent surveyors elicited loan use both directly (i.e., by asking how individuals spent their loan proceeds) and indirectly (i.e., through a list-randomization technique that allows individuals to hide their answer from the surveyor). We find that direct elicitation under-reports the non-enterprise uses of loan proceeds.     

Debit or credit?

Empirical consumer payment price sensitivity has implications for theory, optimal regulation of payment card networks, and business strategy. A critical margin is the price of a credit card charge. A revolver who did not pay her most recent balance in full pays interest; other credit card users do not. I find that revolvers are substantially less likely to incur credit card charges and substantially more likely to use a debit card, conditional on several proxies for transaction demand and tastes. Debit use also increases with credit limit constraints and decreases with credit card possession. Additional results suggest that debit is becoming a stronger substitute for credit over time.     

Restricting consumer credit access: Household survey evidence on effects around the Oregon rate cap

Many policymakers and some theories hold that restricting access to expensive credit helps consumers by preventing overborrowing. I examine some effects of restricting access, using household panel survey data on payday loan users collected around the introduction of binding restrictions on payday loan terms in Oregon. Borrowing fell in Oregon relative to Washington, with former payday borrowers shifting partially into plausibly inferior substitutes: bank overdrafts and late bill payment. Additional evidence suggests that restricting access caused deterioration in the overall financial condition of Oregon households. Overall the results are consistent with restricted access harming, not helping, consumers on average.     

WHERE IS THE MISSING CREDIT CARD DEBT? CLUES AND IMPLICATIONS

I create comparable estimates of aggregate credit card use based on household data from the Survey of Consumer Finances (SCF) and industry data. The two sources match up well on credit card charges and fairly well on account totals. But the SCF always yields much lower estimates of revolving debt. My estimated lower bound for the discrepancy in 2004 is half of the revolving credit card debt total implied by industry data. There is no obvious source for this remaining discrepancy and some evidence that the discrepancy has grown over time. Such growth is worrisome because it parallels substantial changes in credit card use and in the pool of credit card users, suggesting that the discrepancy could be driven by household underreporting that is correlated with unobserved heterogeneity. This correlation could confound inference on the relationship between credit card borrowing and outcomes of interest like household financial condition, consumption paths, and portfolio choice. Given this possibility it is critical to continue developing evidence on whether and why household surveys undercount credit card borrowing.