Credit card borrowing, illiquid assets and self-control problems
Title: Credit card borrowing, illiquid assets and self-control problems
Author: MILDE, Christopher
Citation: Florence, European University Institute, 2008
Series/Report no.: EUI PhD theses; Department of Economics
The inclusion of findings from psychology into economics (see e.g. Rabin (1998)) and the increasingly available evidence of deviations from the standard model of behaviour in economics (e.g. DellaVigna (2007)) have given rise to a new sub-discipline of economics, behavioural economics. Behavioural economics studies deviations from the standard economic model in three respects: first, non-standard preferences, second, non-standard beliefs, and third, non-standard decision making. The study of self-control problems can be regarded a subfield of the study of non-standard preferences. A general definition of self-control problems is the inability to stick to a decision or the inability to carry out a plan. This inability might result from time-inconsistent preferences, i.e. preferences that make people judge objectively equivalent trade-offs differently only due to the fact, that they make these judgements at different points in time. The recent years have seen a surge of theoretical literature establishing a theoretical framework for the analysis of self-control problems and applying this framework to many fields (see Frederick et al. (2002), and Chapter 1). Some contributions have also assessed the effect of self-control problems on different outcomes empirically. My thesis is an attempt to contribute to this empirical literature. I try to assess the effect of self-control problems on different outcomes of interest, namely credit card borrowing and saving. After surveying the relevant literature in Chapter 1, I discuss the measurement of self-control problems in Chapter 2. Chapter 3 is an attempt to assess the effect of self-control problems on credit card borrowing and Chapter 4 is an attempt to assess the effect of self-control problems on saving in illiquid assets. I use data from a recent household survey from Australia.
LC Subject Heading: Credit cards
Defence date: 5 May 2008; Examining board: Prof. Francis Vella, Georgetown University (Supervisor) ; Prof. Pascal Courty, EUI ; Prof. Michael Haliassos, Goethe University, Frankfurt ; Prof. Antoine Bommier, GREMAQ, Université de Toulouse; First made available online 2 June 2015.
Type of Access: openAccess