The Impact of Credit Cards on Spending: A Field Experiment
Carnegie Mellon University
Carnegie Mellon University - Department of Social and Decision Sciences
April 13, 2009
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.
Number of Pages in PDF File: 29
Keywords: Credit cards, spending, field experiments
JEL Classification: C93, D1
Date posted: April 16, 2009 ; Last revised: September 21, 2010
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