Middlebury

 

Presentation Title: The Plastic Effect - Measuring the Effect of Debit Cards on Spending

Section: Mental Maps I

Location: , 219

Date & Time: Friday, April 19, 2013 - 9:15am - 9:30am

Abstract:

Credit and debit cards are very common and convenient methods of payment, but some research suggests that shopping with cards makes consumers spend more than they otherwise would with cash. In an auction experiment, Prelec and Simester (2001) found evidence of a large “credit card premium,” but their experiment could not identify whether the credit card premium arises due to a pure “plastic effect” or the effect of delayed payments.

There are two key differences between credit cards and cash: the timing of payments and the physical form. To identify what I call the “plastic effect,” I hold a similar auction experiment and assign each subject one of two payment methods: cash or debit card. In a sealed-bid uniform price auction, I find little evidence of a plastic effect.

Type of Presentation: Individual oral

Oral presenters
Presentation Area: Economics

Presentation Topic: Finance

Arts presenters
Format: 

Class Project
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Presenter Information
Presenter(s): Sweeney, Martin D.
Major(s): Economics; Environmental Studies
Class Year(s): 2013

Sponsor(s): Carpenter, Jeffrey P.
Dept(s): Economics

Moderator: ,