Assessing the Optimism of Payday Loan Borrowers

41 Pages Posted: 13 Mar 2013

See all articles by Ronald J. Mann

Ronald J. Mann

Columbia University - Law School

Date Written: March 12, 2013


This essay compares the results from a survey administered to payday loan borrowers at the time of their loans to subsequent borrowing and repayment behavior. It thus presents the first direct evidence of the accuracy of payday loan borrowers’ understanding of how the product will be used. The data show, among other things, that about 60% of borrowers accurately predict how long it will take them finally to repay their payday loans. The evidence directly contradicts the oft-stated view that substantially all extended use of payday loans is the product of lender misrepresentation or borrower self-deception about how the product will be used. It thus has direct implications for the proper scope of effective regulation of the product, a topic of active concern for state and federal regulators.

Suggested Citation

Mann, Ronald J., Assessing the Optimism of Payday Loan Borrowers (March 12, 2013). Columbia Law and Economics Working Paper No. 443, Available at SSRN:

Ronald J. Mann (Contact Author)

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States

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