Abstract

http://ssrn.com/abstract=690826
 
 

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Behavioral Economics, Overindebtedness & Comparative Consumer Bankruptcy: Searching for Causes and Evaluating Solutions


Jason J. Kilborn


The John Marshall Law School; Radboud University Nijmegen

July 3, 2010

Bankruptcy Developments Journal, Vol. 22, p. 13, 2005

Abstract:     
In this paper, I draw on the insights of behavioral economics to explain the rise of consumer debt and analyze the potential of several emerging European consumer debt relief systems in preventing excessive consumer borrowing. First, I submit that behavioral economics offers compelling explanations for some of the reasons why consumers get themselves into financial trouble despite the obvious dangers of over-borrowing and over-spending. Consequently, I propose that behavioral economics might also indicate which legislative models of consumer debt relief might be most effective, not only in treating, but also in combating the growing problem of excessive consumer debt. Drawing on my recent studies of the operation of the new consumer debt relief systems in Germany, France, Belgium, and Luxembourg (and my initial observations on the system in the Netherlands), I argue that some aspects of these systems are likely to be more effective - and others may even be counterproductive - in achieving the often-stated European goals of imparting positive lessons to consumers about personal responsibility and payment morality. At least from the perspective of behavioral economics, the German system seems to emerge as the most potentially successful system, although other systems seem to be moving in the right direction in many areas.

Number of Pages in PDF File: 34

Keywords: Consumer bankruptcy, comparative law, behavioral economics

JEL Classification: A12, A14, H31, I38, K39

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Date posted: April 7, 2005 ; Last revised: July 5, 2010

Suggested Citation

Kilborn, Jason J., Behavioral Economics, Overindebtedness & Comparative Consumer Bankruptcy: Searching for Causes and Evaluating Solutions (July 3, 2010). Bankruptcy Developments Journal, Vol. 22, p. 13, 2005. Available at SSRN: http://ssrn.com/abstract=690826 or http://dx.doi.org/10.2139/ssrn.690826

Contact Information

Jason J. Kilborn (Contact Author)
The John Marshall Law School ( email )
315 South Plymouth Court
Chicago, IL 60604
United States
Radboud University Nijmegen ( email )
Nijmegen, 6500 HK
Netherlands
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