Generalized Hyperbolic Discounting, Borrowing Aversion, and Debt Holding Behavior

Abstract

Analysis of a broad Web-based survey confirms thatn naive respondents with a higher degree of declining impatience have larger debts, whereas sophisticates display only insignificant positive association between declining impatience and debt holding. The incidence of the sign effect is negatively associated with debt holding. Declining impatience relates to overborrowing inclination that is revealed by high debt/income ratios, borrowing on credit cards, borrowing of unsecured consumer loans, and/or the experiences of engaging in debt-restructuring and/or of declaring personal bankruptcy.