Code for: Targeted Debt Relief and the Origins of Financial Distress: Experimental Evidence from Distressed Credit Card Borrowers
- Dobbie, Will (Harvard Kennedy School and NBER)
- Song, Jae (Social Security Administration)
- Washington Center for Equitable Growth
AbstractWe study the drivers of financial distress using a large-scale field experiment that offered randomly selected borrowers a combination of (i) immediate payment reductions to target short-run liquidity constraints and (ii) delayed interest write-downs to target long-run debt constraints. We identify the separate effects of the payment reductions and interest write-downs using both the experiment and cross-sectional variation in treatment intensity. We find that the interest write-downs significantly improved both financial and labor market outcomes, despite not taking effect for three to five years. In sharp contrast, there were no positive effects of the more immediate payment reductions. These results run counter to the widespread view that financial distress is largely the result of short run constraints.
2004-01-01 / 2015-12-31Time Period: Thu Jan 01 00:00:00 EST 2004--Thu Dec 31 00:00:00 EST 2015 (Main Data Window)
Is cited by
DOI: 10.1257/aer.20171541 (Text)
Dobbie, Will, and Jae Song. “Targeted Debt Relief and the Origins of Financial Distress: Experimental Evidence from Distressed Credit Card Borrowers.” American Economic Review 110, no. 4 (April 1, 2020): 984–1018. https://doi.org/10.1257/aer.20171541.
- ID: 10.1257/aer.20171541 (DOI)
Update Metadata: 2020-05-18 | Issue Number: 2 | Registration Date: 2020-03-23