Reverse causality is yet another prospective confound, since specific habits such as for instance risk aversion and time choices could figure out indebtedness, as opposed to the reverse. We are able to rule down reverse causality since the alterations in financial obligation we learned resulted from exogenously issued credit card debt relief. However, our estimate http://www.personalbadcreditloans.net/reviews/cash-store-loans-review/ for the ramifications of credit card debt relief may nevertheless be biased if credit card debt relief is strongly correlated with initial debts.
To deal with this, To address this show that is we your debt relief choices produced by social employees led to significant variation, to make certain that more indebted individuals would not always get more relief. We discovered that 72% of our participants received much less relief than their total debts that are eligible and, general, credit card debt relief quantities had been just averagely correlated (0.55) with initial debt amounts. On average, relief provided was SGD 3,709 less than total debts that are eligible together with SD of this huge huge huge difference was SGD 7,293. As an additional robustness check, we excluded individuals who’d all eligible debts relieved (SI Appendix, Table S9) and discovered broadly comparable outcomes.
Next, we considered liquidity constraints being an explanation that is alternative Highly indebted individuals may show current bias and danger aversion because having money at hand is much more crucial if it is tough to borrow (13). (more…)