IDEAS home Printed from https://ideas.repec.org/a/nat/nathum/v8y2024i9d10.1038_s41562-024-01922-8.html
   My bibliography  Save this article

Inequality in high-cost borrowing and unemployment insurance generosity in US states during the COVID-19 pandemic

Author

Listed:
  • Lawrence M. Berger

    (University of Wisconsin–Madison)

  • Meta Brown

    (The Ohio State University)

  • J. Michael Collins

    (University of Wisconsin–Madison)

  • Rachel E. Dwyer

    (The Ohio State University)

  • Jason N. Houle

    (Dartmouth College)

  • Stephanie Moulton

    (The Ohio State University)

  • Davon Norris

    (University of Michigan)

  • Alec P. Rhodes

    (University of Wisconsin–Madison)

Abstract

US consumers may turn to the private market for credit when income and government benefits fall short. The most vulnerable consumers have access only to the highest-cost loans. Prior research on trade-offs of credit with government welfare support cannot distinguish between distinct forms of unsecured credit due to data limitations. Here we provide insight on credit–welfare state trade-offs vis-à-vis unemployment insurance generosity by leveraging a large sample of credit data that allow us to separate credit cards, personal loans and alternative financial services loans and to analyse heterogeneity in credit use by household income. We find that more generous state unemployment insurance benefits were associated with a lower probability of high-cost credit use during the first seven quarters of the coronavirus disease 2019 (COVID-19) pandemic. This inverse association was concentrated among consumers living in low-income households. Our results support theories that public benefits are inversely associated with the use of costly credit.

Suggested Citation

  • Lawrence M. Berger & Meta Brown & J. Michael Collins & Rachel E. Dwyer & Jason N. Houle & Stephanie Moulton & Davon Norris & Alec P. Rhodes, 2024. "Inequality in high-cost borrowing and unemployment insurance generosity in US states during the COVID-19 pandemic," Nature Human Behaviour, Nature, vol. 8(9), pages 1676-1688, September.
    • Handle: RePEc:nat:nathum:v:8:y:2024:i:9:d:10.1038_s41562-024-01922-8
    DOI: 10.1038/s41562-024-01922-8
    as

    Download full text from publisher

    File URL: https://www.nature.com/articles/s41562-024-01922-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1038/s41562-024-01922-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nat:nathum:v:8:y:2024:i:9:d:10.1038_s41562-024-01922-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.nature.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.