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
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 â€œcredit card premium,â€ but their experiment could not identify whether the credit card premium arises due to a pure â€œplastic effectâ€ 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 â€œplastic effect,â€ 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
Presentation Area: Economics
Number of presenters:
Presenter(s): Sweeney, Martin D.
Major(s): Economics; Environmental Studies
Class Year(s): 2013
Sponsor(s): Carpenter, Jeffrey P.