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The Impact of Credit Cards on Spending: A Field Experiment
Elif Incekara Hafalir Carnegie Mellon University George Loewenstein Carnegie Mellon University - Department of Social and Decision Sciences April 13, 2009 Abstract: In a field experiment, we measure the impact of payment with credit card as compared with cash on insurance company employees' spending on lunch in a cafeteria. We exogenously changed some diners' payment medium from cash to a credit card by giving them an incentive to pay with a credit card. Surprisingly, we find that credit cards do not increase spending. However, the use of credit cards has a differential impact on spending for revolvers and convenience users: Revolvers spend less when induced to spend with a credit card, whereas convenience users display the opposite pattern.
Keywords: Credit cards, spending, field experiments JEL Classifications: C93, D1 Working Paper SeriesDate posted: April 16, 2009 ; Last revised: April 20, 2009Suggested CitationContact Information
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