Working Papers
The Supply Side of Consumer Debt Repayment (with Justin Katz and Claire Shi). Updated 2024.
[Abstract | Draft]
Minimum payments on credit card debt allow consumers to repay slowly: despite being unsecured, the average $7,000 balance generally amortizes in over 20 years. We study how lenders choose these minimum payments and the impacts of these choices on equilibrium consumer debt outcomes. When short-term illiquidity makes many borrowers unable to make higher payments, lenders set low minimums to limit default costs. Alternatively, if many borrowers make near-minimum payments for reasons besides illiquidity (e.g., due to anchoring), lenders set low minimums to generate interest revenue. To separate these two forces, we use payment-level data from a credit bureau to document a new fact about intra-temporal debt repayment. Consumers often revolve high-interest credit card debt while making excess payments on low-interest installment debt, providing evidence that low payments aren't solely liquidity-driven. We use this fact to estimate an empirical model that predicts realistically low lender minimums. The model suggests that without anchoring, minimums would be over twice as high for most borrowers. Lenders amplify consumer biases, accounting for 20% of the total increase in credit card debt and 85% of defaults from anchoring in our model.
FinTech & Financial Frictions: The Rise of Revenue-Based Financing (with Claire Shi and Rowan Clarke). Updated 2024. Reject & Resubmit at Review of Financial Studies
[Abstract | Draft]
We use transaction-level data from a major payment processor to study FinTech-provided small business "revenue-based financing." After eight months, payments through the processor are 16% lower for businesses who take financing offers than observably similar non-takers, driven by moral hazard from revenue hiding and adverse selection. Two natural experiments suggest FinTech platforms' non-lending interactions with small businesses---e.g., payment processing and inventory management---can limit both hiding and selection. By tying repayment to the continued use of non-lending products, FinTechs can mitigate enforcement and monitoring frictions. Our results help explain the rise of FinTech-provided revenue-based financing.
The Social Integration of International Migrants: Evidence from the Networks of Syrians in Germany (with Michael Bailey, Drew Johnston, Martin Koenen, Theresa Kuchler, and Johannes Stroebel). Updated 2023. R&R at Journal of Political Economy
[Abstract | Draft | Summary (English) | Summary (German)]
We use de-identified friendship data from Facebook to study the social integration of Syrian migrants in Germany. We decompose the significant spatial variation in migrants’ integration levels into the rate at which Germans befriend their neighbors in general and the particular rate at which they befriend Syrian migrants versus other Germans. We follow the friending behavior of Germans that move across locations to show that both forces are more affected by local institutions and policies than persistent individual characteristics or preferences of local natives. We explore the characteristics of places with higher integration levels, and show that integration courses causally affect place-specific equilibrium integration levels by shifting the rates of Germans befriending Syrians.
Published Papers
Social Networks Shape Beliefs and Behavior: Evidence from Social Distancing during the Covid-19 Pandemic (with Michael Bailey, Drew Johnston, Martin Koenen, Theresa Kuchler, and Johannes Stroebel). Journal of Political Economy Microeconomics, 2024.
[Abstract | Published Version | Code | NBER Digest]
We analyze de-identified data from Facebook to show how social connections affect beliefs and behaviors in high-stakes settings. During the COVID-19 pandemic, individuals with friends in regions facing severe disease outbreaks reduced their mobility more than their demographically similar neighbors with friends in less affected areas. To explore why social connections shape behaviors, we show that individuals with higher friend exposure to COVID-19 are more supportive of social distancing measures and less likely to advocate to reopen the economy. We conclude that friends influence individuals’ behaviors in part through their beliefs, even when there is abundant information from expert sources.
JUE Insight: The geographic spread of COVID-19 correlates with structure of social networks as measured by Facebook (with Theresa Kuchler and Johannes Stroebel). Journal of Urban Economics, 2022.
[Abstract | Published Version | Code | DSCC-19 Presentation Video | Guardian Coverage | Daily Mail Coverage | FAZ Coverage]
We use aggregated data from Facebook to show that COVID-19 is more likely to spread between regions with stronger social network connections. Areas with more social ties to two early COVID-19 “hotspots” (Westchester County, NY, in the U.S. and Lodi province in Italy) generally had more confirmed COVID-19 cases by the end of March. These relationships hold after controlling for geographic distance to the hotspots as well as the population density and demographics of the regions. As the pandemic progressed in the U.S., a county’s social proximity to recent COVID-19 cases and deaths predicts future outbreaks over and above physical proximity and demographics. In part due to its broad coverage, social connectedness data provides additional predictive power to measures based on smartphone location or online search data. These results suggest that data from online social networks can be useful to epidemiologists and others hoping to forecast the spread of communicable diseases such as COVID-19.
The Determinants of Social Connectedness in Europe (with Michael Bailey, Drew Johnston, Theresa Kuchler, Bogdan State, and Johannes Stroebel). Social Informatics, 2020.
[Abstract | Published Version | Online Appendix | Code | SocInfo 2020 Presentation Video | Slides]
We use de-identified and aggregated data from Facebook to study the structure of social networks across European regions. Social connectedness declines strongly in geographic distance and at country borders. Historical borders and unions — such as the Austro-Hungarian Empire, Czechoslovakia, and East/West Germany — shape present-day social connectedness over and above today’s political boundaries and other controls. All else equal, social connectedness is stronger between regions with residents of similar ages and education levels, as well as between regions that share a language and religion. In contrast, region-pairs with dissimilar incomes tend to be more connected, likely due to increased migration from poorer to richer regions.
