Can “living in the present” be a bad thing?

Some individuals borrow extensively on their credit cards. This paper tests whether present biased time preferences correlate with credit card borrowing. In a field study, we elicit individual time preferences with incentivized choice experiments, and match resulting time preference measures to individual credit reports and annual tax returns. The results indicate that present-biased individuals are more likely to have credit card debt, and have significantly higher amounts of credit card debt, controlling for disposable income, other sociodemographics, and credit constraints.

Source: “Present-Biased Preferences and Credit Card Borrowing” from IZA Discussion Paper No. 4198, May 2009 

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