Less Is Core: Consumer Debt Repayment and the Budget Constraint Paradox

Russel Nelson, University of California, Irvine, USA
Mary Celsi, California State University, Long Beach, USA
Mary Gilly, University of California, Irvine, USA
Stephanie Dellande, Menlo College, USA
How does financial constraint affect debt repayment behavior? Using a sample of indebted consumers, we find that higher levels of financial constraint are predictive of meeting both short-term financial goals and the long-term goal of paying off debt. Paradoxically, consumers with less money are more likely to repay their debts.
[ to cite ]:
Russel Nelson, Mary Celsi, Mary Gilly, and Stephanie Dellande (2014) ,"Less Is Core: Consumer Debt Repayment and the Budget Constraint Paradox", in NA - Advances in Consumer Research Volume 42, eds. June Cotte and Stacy Wood, Duluth, MN : Association for Consumer Research, Pages: 622-623.