Time inconsistency and overdraft use: evidence from transaction data and behavioral measurement experiments

Households regularly fail to make optimal financial decisions. But what are the underlying reasons for this? Using two conceptually distinct measures of time inconsistency based on bank account transaction data and behav
Households regularly fail to make optimal financial decisions. But what are the underlying reasons for this? Using two conceptually distinct measures of time inconsistency based on bank account transaction data and behavioral measurement experiments, we show that the excessive use of bank account overdrafts is linked to time inconsistency. By contrast, there is no correlation between a survey-based measure of financial literacy and overdraft usage. Our results indicate that consumer education and information may not suffice to overcome mistakes in households’ financial decision-making. Rather, behaviorally motivated interventions targeting specific biases in decision-making should also be considered as effective policy tools.
show moreshow less

Download full text files

Export metadata

  • Export Bibtex
  • Export RIS
Metadaten
Author:Andrej Gill, Florian Hett, Johannes Tischer
URN:urn:nbn:de:hebis:30:3-645987
URL:https://ssrn.com/abstract=4076790
DOI:http://dx.doi.org/10.2139/ssrn.4076790
Parent Title (English):SAFE working paper ; No. 347
Series (Serial Number):SAFE working paper series (347)
Publisher:SAFE
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Year of Completion:2022
Year of first Publication:2022
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2022/04/11
Tag:Behavioral Measurement; Experiment; Fintech; Household Finance; Paycheck Sensitivity; Time Inconsistency; Time Preferences
Issue:March 31, 2022
Pagenumber:87
HeBIS PPN:495041343
Institutes:Wirtschaftswissenschaften
House of Finance (HoF)
Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:D14 Personal Finance
D90 General
G51
G53
Sammlungen:Universitätspublikationen
Licence (German):License LogoDeutsches Urheberrecht

$Rev: 11761 $