Working Papers
The Supply Side of Consumer Debt Repayment (with Justin Katz and Claire Shi). Updated 2026.
[Abstract | Draft | Cited in 2025 Congressional Report on Consumer Finance]
We study how lender responses to consumer biases affect credit card debt. Using account-level credit bureau data, we document a new fact: many consumers make near-minimum credit card repayments while also overpaying lower-interest installment debt. We estimate an empirical model in which lenders optimally set minimum payments given this behavior. Because some liquid consumers make near-minimum payments, lenders lower minimums to slow repayment, increasing high-interest debt balances and interest revenue. Our model implies that this lender response increases revolving debt by $46 billion. This finding illustrates how optimizing lenders can amplify the effects of consumer biases in equilibrium.
Gambling for Goals (with Costas Arkolakis, Spencer Yongwook Kwon, Claire Shi, and Hyunjoo Yang). Updated 2026.
[Abstract | Draft]
As young adults in advanced economies have become increasingly pessimistic about their economic prospects in recent years, gambling-like financial activities have proliferated. We link these trends through a Friedman-Savage (1948) motive: when life goals such as homeownership or marriage seem out of reach, individuals turn to financial gambles. We test the theory using an original survey combined with millions of linked records from Korea’s leading credit bureau, telecom provider, and credit card issuer. Consistent with the theory, individuals who place greater importance on hard-to-reach financial goals are more likely to exhibit risk-seeking preferences and to engage in high-risk investment. Conversely, when goals become attainable, risk-taking declines: exploiting Korea's housing lottery, which quasi-randomly allocates subsidies for home purchase, we show that attaining homeownership reduces interest in cryptocurrency. We conclude with a stylized calibration that shows how goal-driven risk preferences can amplify the welfare costs of overoptimism.
Revenue-Based Financing (with Claire Shi and Rowan Clarke). Updated 2025. Reject & Resubmit at Review of Financial Studies
[Abstract | Draft | BII Presentation Video | J-Pal Coverage]
We study revenue-based financing, an emerging capital source for small firms in low- and middle-income countries. Using transaction-level data from a South African payment platform, we show firms that take financing process 16% less revenue through the platform than observably similar non-takers after eight months, slowing repayment. Two natural experiments show this reflects moral hazard from firms diverting revenue and adverse selection. Repayment improves when firms use the platform’s other services (e.g., inventory management tools), and screening improves with longer histories and repeat financing. Our results highlight the frictions with flexible repayment models in developing economies, and how providers mitigate them.
Behavioral Cross-Selling: Evidence from Retail Credit Cards (with Sarah E. Robinson and Claire Shi). Updated 2025.
[Abstract | Draft | Retail Card Rewards Data]
Why do some non-financial firms rely on revenue from consumer financial products? At several large U.S. retailers, direct revenues from credit card partnerships exceed total operating income. This paper proposes a theory of behavioral cross-selling, in which firms use their access to customers to cross-sell products that capitalize on behavioral biases, such as inattention or forgetfulness. We test our theory in the retail credit card market using data from a major credit bureau. Although retail cards account for only 17% of balances in our sample, they generate 45% of missed minimum payments, triggering late fees. Liquidity constraints cannot fully explain missed minimums: among individuals with multiple cards, nearly half of missed payments on retail cards could have been avoided by reallocating excess payments from other cards. Consistent with the theory, firms in locations with more avoidable missed payments are more likely to offer retail cards and provide larger sign-up incentives. We discuss how behavioral cross-selling can help explain practices in industries such as airlines, auto dealerships, tax preparation services, and sports entertainment.
Published Papers
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). Journal of Political Economy, 2026.
[Abstract | Published Version | Appendix | Summary (English) | Summary (German)]
We use de-identified friendship data from Facebook to study the social integration of Syrian migrants in Germany. Our analysis establishes five key findings: (1) Places differ substantially in their propensities to socially integrate migrants. This regional variation in integration outcomes largely reflects causal place-based effects. (2) Spatial variation in migrants' social integration can be decomposed into the rate at which Germans befriend their neighbors in general and the particular rate at which they befriend 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 by persistent individual characteristics or preferences of local natives. (3) Integration courses causally affect place-specific equilibrium integration levels by increasing the rate at which Germans befriend Syrian migrants. (4) Social integration helps migrants obtain help from natives across a range of settings such as finding jobs and housing. (5) Natives quasi-randomly exposed to a migrant in high school are more likely to befriend other migrants later in life.
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.
