Balance Reframing: Paying By the Purchase Promotes Higher Repayments

Grant Donnelly, Harvard Business School, USA
Zoe Chance, Yale University, USA
Michael Norton, Harvard Business School, USA
Credit card companies aggregate all purchases into one larger loss, blunting the ‘pain’ of such losses (Thaler, 1985). Allowing payments to be made toward each individual purchase of the total bill, we find consumers pay significantly more toward their debts relative to an aggregated balance, prioritizing ‘painful’ purchases first.
[ to cite ]:
Grant Donnelly, Zoe Chance, and Michael Norton (2014) ,"Balance Reframing: Paying By the Purchase Promotes Higher Repayments", in NA - Advances in Consumer Research Volume 42, eds. June Cotte and Stacy Wood, Duluth, MN : Association for Consumer Research, Pages: 32-35.