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Borrow Less Tomorrow: Behavioral Approaches to Debt Reduction

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Author Info

  • Dean Karlan
  • Jonathan Zinman

Abstract

Mounting evidence suggests that behavioral factors depress wealth accumulation. Although much research and policy focuses on asset accumulation, for many households debt decumulation is more efficient. Yet the mass market for debt reduction services is thin. So we develop and pilot test Borrow Less Tomorrow (BoLT), a behavioral approach to debt reduction that combines a simple decision aid, social commitment, and reminders. Results from a sample of free tax-preparation clients with eligible debt in Tulsa (N=465) indicate strong demand for debt reduction: 41% of those offered BoLT used it to make a plan to accelerate debt repayment. Using random assignment to BoLT offers, we find weak evidence that the BoLT package offered reduces credit card debt.

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File URL: http://crr.bc.edu/working-papers/borrow-less-tomorrow-behavioral-approaches-to-debt-reduction/
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Bibliographic Info

Paper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number wp2012-17.

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Length: 39 pages
Date of creation: May 2012
Date of revision: May 2012
Handle: RePEc:crr:crrwps:wp2012-17

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