Friedman Forum: How Do Individuals Repay Their Debt? Featuring Booth Professor Neale Mahoney

February 1, 2019

12:30pm 1:30pm

Saieh Hall for Economics, Rm. 021 | 5757 S. University Ave, Chicago, IL

When faced with debt across multiple credit cards, do people pay down their balances in a way that makes financial sense? On February 1, BFI will host Chicago Booth Professor Neale Mahoney for a Friedman Forum luncheon lecture on his recent working paper, “How Do Individuals Repay Their Debt? The Balance-Matching Heuristic.”

In the paper, Professor Mahoney and his colleagues examine how credit card holders in the United Kingdom divide their payments between credit card balances. Instead of paying down the card with the highest interest rate first, the authors find people make payments based on the size of the balances on each credit card. These findings reveal the large gap between the optimal way to repay debt, and reality of how people repay their credit card debt.

The Friedman Forum series offers students an opportunity for informal discussions with prominent economists.

Agenda

12:15 p.m. Lunch available

12:30 – 12:35 p.m. Welcome and introduction

12:35 – 1:15 p.m. Presentation

1:15 – 1:30 p.m. Audience Q&A

1:30 p.m. Program concludes

Additional Materials

BFI Research Brief: “How Do Individuals Repay Their Debt? The Balance-Matching Heuristic”
It's Not OK for Finance to Be Dangerous Again,” Bloomberg News, Jan. 9, 2018

February 1, 2019 - 12:30pm 1:30pm