Obesity and Credit Risk
College of William and Mary - Mason School of Business
April 9, 2012
Obesity provides a potentially informative signal about individuals' choices and preferences. Using NLSY survey data, we estimate that the loan delinquency rate among the obese is 20 percent higher than among the non-obese after controlling for numerous observable, prohibited, and - to lenders - unobservable credit risk factors. The economic significance of obesity for delinquencies is comparable to that of job displacements. Obesity is particularly informative about future delinquencies among those with low credit risk. In terms of channels, we find that the obesity effect is at least partially mediated through poor health, but is not attributable to individuals' time preferences.
Number of Pages in PDF File: 73
Keywords: obesity, default, delinquency, bankruptcy, financial distress, personal finance, household finance, consumer credit
JEL Classification: D12, D91, G00, G19, I19working papers series
Date posted: March 19, 2011 ; Last revised: June 29, 2012
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