WHY DO PEOPLE USE DEBIT CARDS: EVIDENCE FROM CHECKING ACCOUNTS

Debit cards are the fastest growing consumer payment method despite being more expensive and less versatile than credit cards. In this paper, we investigate some of the oft cited explanations for debit card use. Checking account data shows that debit card use is correlated with age, pay frequency, overdrafting, and ATM use, but not income, gender, crime, or expenditure. The data contain some signs that debit cards might be used as a method of spending restraint. (JEL D14, G21, L14)     

Credit Card Debt and the Provision of Financial Support to Kin in the US

Credit card debt stands at over $1 trillion in the US and grows continuously. Scholars have argued that high (and growing) levels of credit card debt are attributable in part to rising economic vulnerabilities, combined with a thinning public safety net, credit cards being increasingly employed to make ends meet in this context. This paper extends this line of work by stressing that individuals and households do not rely on their credit cards only to mitigate their own financial hardships, but also those experienced by their non-coresidential kin members. More specifically, building on the notion that kin networks can constitute a source of negative social capital, we argue that individuals often accumulate credit card debt as they attempt to provide monetary assistance to their relatives in need. We also show that this effect is particularly strong in lower-income groups and in African American communities, in which need levels are especially high. Based on random and fixed effects analyses of data from the Panel Study of Income Dynamics, these insights extend scholarship on both kin networks of support and the sources of credit card debt.

     

College Students and Credit Card Use: The Role of Parents, Work Experience, Financial Knowledge, and Credit Card Attitudes

This study examined the influence of parental interactions, years of work experience, financial knowledge, credit card attitudes, and personal characteristics on college students’ credit card behaviors (i.e., number of cards and amount of debt). Based on data collected across seven universities (N = 413), we found that students who had parents who argued about finances, were juniors/seniors, and were comfortable making minimum payments were the most likely to have $500 or more in credit card debt and two or more credit cards. In addition, number of credit cards held was the only dependent variable influenced by gender and fear of credit cards. These results highlight the importance of early interventions in the life of college students including involving parents as positive role models.     

Demographics, attitude, personality and credit card features correlate with credit card debt: A view from China

With the help of a commercial bank in China, we studied consumer credit card debt behavior² in correlation with demographics, attitude, personality, and credit card features factors. The study was conducted by using mail-in questionnaires, which were sent to credit card holders who was using or had used either revolving credit or petty installment plans. According to regression functions, we found that demographic variables and credit card features had limited explanatory power compared to attitude variables and personality variables. Specifically, we found that revolving credit use and petty installment use were closely related to attitudes about credit cards, money and debt. Risk attitude efficiently predicted petty installment use; however, it did not correlate with revolving credit use. Personality factors of self-control, self-esteem, self-efficacy, deferring gratification, internal locus of control and impulsiveness were significantly correlated with revolving credit use; on the other hand, sensation seeking, impulsiveness, and deferring gratification were correlated with petty installment use. We also found that some credit card features easily led to an “illusion of income” that facilitated consumer credit card debt behavior.     

Financial Knowledge and Credit Card Behavior of College Students

This study examined the relationship between financial knowledge and credit card behavior of college students. The widespread availability of credit cards has raised concerns over how college students might use those cards given the negative consequences (both immediate and long-term) associated with credit abuse and mismanagement. Using a sample of 1,354 students from a major southeastern university, results suggest that financial knowledge is a significant factor in the credit card decisions of college students. Students with higher scores on a measure of personal financial knowledge are more likely to engage in more responsible credit card use. Specific behaviors chosen have been associated with greater costs of borrowing and adverse economic consequences in the past.     

Credit Card Ownership Among American High School Seniors: 1997–2008

The purpose of this study is to investigate the rise in credit card ownership rates among high school seniors in the United States. It uses the Jump$tart Coalition’s cross-sectional surveys from 1997 to 2008 to analyze the determinants of credit card ownership among high school seniors. These results show that students with credit cards are less financially literate than students without credit cards; and students with credit cards in their own names are almost twice as likely to work during the school year for money. These findings help make a case for improved financial education and training, and institutional changes that limit the pervasive issuance of credit cards to high school students.     

NEW EVIDENCE ON CREDIT CARD BORROWING AND REPAYMENT PATTERNS

A new dataset allows researchers to examine patterns of credit card use for both borrowing and payoff. This article addresses changes in these behaviors for different birth cohorts by estimating cohort‐adjusted age profiles for debt and payoff rates based on a time series of cross sections. Younger consumers are found to be borrowing more heavily and repaying at lower rates than older generations. The accumulation of credit card debt is found to continue over the lifecycle. This has implications for recent changes in laws governing the credit card industry. Increases in minimum required payment rates are examined and are found to increase actual payoff rates more than proportionately. (JEL D12)     

Exploring Adoptive Motherhood: Adoption-Seeking Among Hispanic and Non-Hispanic White Women

Predictors of ever having sought adoption are evaluated for Hispanic and non-Hispanic White women. Analysis of the 2002 National Survey of Family Growth, a nationally representative study of reproductive health of 7,643 women aged 15 to 44 years, is employed. These include Hispanic and non-Hispanic White women aged 18 to 44 who are currently married and cohabiting (n = 3,118) and Hispanic and non-Hispanic White women aged 18 to 44 of all marital statuses (n = 5,236). Being married, older, and attending religious services are significantly associated with having sought adoption among non-Hispanic White women. Nativity status, language spoken, and resources are significantly associated with having sought adoption among Hispanic women.     

THE WELFARE EFFECT OF ACCESS TO CREDIT

I present a model in which credit and outside money can be used as means of payment in order to analyze how access to credit affects welfare when credit markets feature limited participation. Allowing more agents to use credit has an ambiguous effect on welfare because it may make consumption‐risk sharing more inefficient. I calibrate the model using U.S. data on credit‐card use and show that the increase in access to credit from 1990 to the near present has had a slightly negative impact on welfare. (JEL E51, E41)     

Connections with banking institutions and diverse asset portfolios in young adulthood: Children as potential future investors

A central hypothesis of Child Development Accounts (CDA) suggests that savings accounts in childhood lay a foundation for connecting to mainstream banking institutions and diversifying asset portfolios in young adulthood and beyond. While children may have limited savings to invest initially, they are financial actors who may increasingly invest money into different types of savings products over time. This paper uses propensity score weighted, longitudinal data from the Panel Study of Income Dynamics and its supplements to examine the types of financial and nonfinancial assets owned by young adults and whether or not they are more likely to own these assets when they have savings accounts as children. The most commonly owned assets in young adulthood included savings accounts (89%), vehicles (54%) and credit cards (51%). Smaller percentages owned stocks (9%), bonds (6%), and homes (8%). On average, young adults owned two to three different assets. Having savings accounts in childhood was associated with being two times more likely to own savings accounts, two times more likely to own credit cards, and four times more likely to own stocks in young adulthood, compared to not having savings accounts in childhood. Young adults' ownership of more total financial assets was also associated with having savings accounts in childhood. Findings provide some supporting evidence of demand for children's savings accounts. Policy endeavors that remove barriers to account ownership may be advantageous for children and mainstream banks.     

The Life Satisfaction Advantage of Being Married and Gender Specialization

This investigation examined whether the life satisfaction advantage of married over unmarried people decreased over the past 3 decades and whether the changes in contextual gender specialization explained this trend. Contextual gender specialization was defined as a country‐year‐specific share of married women who fully specialize in household work. The author used representative data from the World Values Survey–European Values Study integrated data set for 87 countries (N = 292,525) covering a period of 29 years (1981–2009). The results showed that the life satisfaction advantage of being married decreased over time among men but not among women. Furthermore, the decline of contextual gender specialization correlated with this trend in developed but not in developing countries. In developed countries the life satisfaction of unmarried people increased as the contextual gender specialization declined, whereas the life satisfaction of married people was not affected.     

Determinants of employment of recently arrived Mexican immigrant wives

The work force participation of married, Mexican-origin immigrant women who came to the US in the 1980s was investigated. Determinants of employment utilized in this study are the women's human capital stock, household resources, and labor market structural factors. Nine hypotheses were derived from the analytical model and were examined through logistic regression. Findings showed that all human capital resource and structural labor market factors were significantly related to employment. On the other hand, four of the five family household factors namely: the age and presence of children in the household, husband's income, husband's employment, and non-labor income were significantly related to employment. Furthermore, the positive factors indicating the likelihood of being employed in 1989 for Mexican immigrant wives are: 1) being 25-54 years of age; 2) higher educational levels; 3) speaking fluent English; 4) lower levels of husband's income and non-labor income; 5) employment of husband in 1989; 6) absence of children under age 6 at home; 7) lower non-Hispanic female unemployment rates; 8) higher work force proportion employed in immigrant female-dependent occupations; 9) lower proportions of the Metropolitan Statistical Areas (MSA) population being of Mexican origin; and 10) smaller MSA populations.     

Increased Urge to Gamble Following Near-Miss Outcomes May Drive Purchasing Behaviour in Scratch Card Gambling

Previous research into scratch card gambling has highlighted the effects of these games on players’ arousal and affective states. Specifically, near-miss outcomes in scratch cards (uncovering 2 of 3 needed jackpot symbols) have been associated with high levels of physiological and subjective arousal and negative emotional evaluations, including increased frustration. We sought to extend this research by examining whether near-misses prompted increases in gambling urge, and the subsequent purchasing of additional scratch cards. Participants played two scratch cards with varying outcomes with half of the sample experiencing a near-miss for the jackpot prize, and the other half experiencing a regular loss. Players rated their urge to continue gambling after each game outcome, and following the initial playing phase, were then able to use their winnings to purchase additional cards. Our results indicated that near-misses increased the urge to gamble significantly more than regular losses, and urge to gamble in the near-miss group was significantly correlated with purchasing at least one additional card. Although some players in the loss group purchased another card, there was no correlation between urge to gamble and purchasing in this group. Additionally, participants in the near-miss group who purchased additional cards reported higher levels of urge than those who did not purchase more cards. This was not true for the loss group: participants who experienced solely losing outcomes reported similar levels of urge regardless of whether or not they purchased more scratch cards. Despite near-misses’ objective status as monetary losses, the increased urge that follows near-miss outcomes may translate into further scratch card gambling for a subset of individuals .     

Reassessing Differences in Work and Income in Cohabitation and Marriage

Are cohabiters different than married couples who cohabited before marriage? This study used the 2002 wave of the National Survey of Families and Households to determine how work behavior might differ for 4 relationship types: (a) cohabiters with uncertain marriage plans, (b) cohabiters with definite marriage plans, (c) premarital cohabiters who recently married, and (d) premarital cohabiters married 5 or more years (n = 638). The results are compared with differences found in overall comparisons of all cohabiters and married couples (N = 916) and were markedly different, indicating that overall comparisons do not adequately capture the range of behavior across cohabitation and marriage. Evidence of increased specialization was found in marriage, yet steep behavioral differences were not found between cohabiters with definite marriage plans and recently married couples but instead were associated with longevity in marriage. This implies that any possible causal effect of marriage on behavior may accrue with time spent married.     

Evaluation Results of a 21st Birthday Card Program Targeting High-Risk Drinking

The B.R.A.D. Birthday Card initiative was started on the campus of Michigan State University (MSU) in April 1999. MSU administrators send the safe-drinking 21st birthday card (B.R.A.D.) and laminated wallet card to students shortly before their 21st birthday. Objective: To evaluate the effectiveness of the 21st birthday card, MSU and B.R.A.D., Inc, applied for and were awarded a 2-year US Department of Education grant in 2001. Participants: The authors surveyed 1,731 students within 2 weeks of their 21st birthday. Methods: Of all students turning 21 years old during the study, the authors randomly selected students for each group. A control group received no card. All others received the standard B.R.A.D. card or a gender-tailored message card. Results: Key findings include: 74% of students saved part of the card, 65% shared the card with family or friends, 22% reported thinking about the card during their celebration, 12% reported drinking less because of the card, 15% reported learning something new about alcohol poisoning, and 98% believed that MSU and B.R.A.D. should continue sending cards to students. Conclusions: Receiving, reading, and recalling the content of the B.R.A.D. card appears to reduce the total number of drinks a celebrant consumes.     

U.S. COMMERCIAL BANK LENDING THROUGH 2008:Q4: NEW EVIDENCE FROM GROSS CREDIT FLOWS

What was hiding behind the aggregate commercial bank loans through the end of 2008? We use balance sheet data for every insured U.S. commercial bank from 1999:Q1 to 2008:Q4 to construct credit expansion and credit contraction series and provide new evidence on changes in lending. Until 2008:Q3 net credit growth was not dissimilar to the 1980 and 2001 recessions. However, between the third and fourth quarter credit contraction grew larger than credit expansion across all types of loans and for the largest banks. With the inclusion of 2008:Q4 data our series most resemble the intensification of the Savings and Loan crisis. (JEL E44, E51, G21)     

Scratch cards in Portugal: a hidden threat

This letter aims to highlight a hidden threat in Portugal, scratch cards. Despite having highly addictive components, as compared to other gambling products, scratch card regulation is almost non-existent, possibly leading to an ever-growing multibillion industry. Vulnerable people are easily attracted and there are no strategies to prevent problematic use. Interestingly, however, scratch cards and other lotteries are exclusively provided by a non-profit state-owned organization supposedly promoting responsible gambling. This concern is presented as a starting point for raising awareness in the general public, scientific community and regulatory bodies, so that effective action can follow.     

Nonstandard Work Schedules,Perceived Family Well‐Being,and Daily Stressors

Data from two studies assessed the effects of nonstandard work schedules on perceived family well‐being and daily stressors. Study 1, using a sample of employed, married adults aged 25 – 74 (n = 1,166) from the National Survey of Midlife in the United States, showed that night work was associated with perceptions of greater marital instability, negative family‐work, and work‐family spillover than weekend or daytime work. In Study 2, with a subsample of adults (n = 458) who participated in the National Study of Daily Experiences, weekend workers reported more daily work stressors than weekday workers. Several sociodemographic variables were tested as moderators. Both studies demonstrated that nonstandard work schedules place a strain on working, married adults at the global and daily level.     

HIV Prevention and Social Desirability: Husband–Wife Discrepancies in Reports of Condom Use

Greater use of condoms within marriage would help limit the spread of HIV in sub‐Saharan Africa. Using data from the Malawi Diffusion and Ideational Change Project (MDICP), the authors examined the influence that the fidelity norm and the traditional association between marriage and reproduction have on condom use with a spouse. The sample included 749 married couples. The authors used latent class analysis to estimate a “true,” or latent measure of condom use by couples based on the individual reports of husbands and wives and to explore the reasons why individuals tend to misreport their use of condoms. They found that married couples with more children were more likely to use condoms and that having been informed by experts about AIDS prevention at home induced men and women to overreport condom use within marriage in a survey but may not necessarily increase the extent to which condoms are used.