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The Impact of Credit Cards on Spending: A Field Experiment

29 Pages Posted: 16 Apr 2009 Last revised: 21 Sep 2010

Elif Incekara-Hafalir

Carnegie Mellon University

George Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences

Date Written: 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 Classification: C93, D1

Suggested Citation

Incekara-Hafalir, Elif and Loewenstein, George, The Impact of Credit Cards on Spending: A Field Experiment (April 13, 2009). Available at SSRN: https://ssrn.com/abstract=1378502 or http://dx.doi.org/10.2139/ssrn.1378502

Elif Incekara-Hafalir (Contact Author)

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

George F. Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States
412-268-8787 (Phone)
412-268-6938 (Fax)

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