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Credit Card Debt as a Natural Phenomena

Credit card debt is a phenomenon that is characteristic of the U.S. economy and banking system because the U.S. households prefer using credit cards and regularly report credit card debts. In this context, it is important to examine what factors can influence the increases in borrowings and accumulations of debts. The phenomenon of the credit card debt related to the U.S. households was examined by Meier and Sprenger with references to the focus on individuals’ preferences regarding immediate consumption that can influence the increases in borrowings and debts (Meier & Sprenger, 2010, p. 195).

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Referring to the researchers’ approach to design and measurement, it is necessary to state that Meier and Sprenger chose to collect and analyze two types of data that are the administrative information regarding the participants’ credit card debts and the data regarding the participants’ attitude to immediate consumption. Thus, the researchers worked with the existing data on the participants’ credit card history, and they also experimented to measure the individuals’ preferences regarding consumption (Meier & Sprenger, 2010, p. 197). The selected experiment was designed as an incentivized choice experiment, and it was aimed to explore what preferences regarding the time of consuming new goods concerning the borrowing time are characteristic for individuals (Meier & Sprenger, 2010, p. 195).

The researchers focused on such data as the socio-demographics information about the participants of the study, the credit data, and time preferences associated with immediate and non-immediate consumption (Meier & Sprenger, 2010, p. 198). The median numbers presented in the tables with summary statistics and time preferences reflected the data on gender, age, race, income, debt, and time preferences. The researchers measured time preferences with the focus on the individual discount factor that was selected as important to determine the statistically significant relationship between variables (Meier & Sprenger, 2010, p. 200). Much attention was paid to correlating and comparing the numbers regarding the credit card debts and the focus on time preferences associated with the participants’ desire for immediate and non-immediate consumption.

While focusing on the results of the statistical analysis, Meier and Sprenger concluded that there is a direct relationship between the size of the credit card debt and individuals’ time preferences as the focus on consuming immediately after receiving the new borrowing (Meier & Sprenger, 2010, p. 207). Thus, the authors concluded that those persons who prefer to buy goods immediately after receiving the borrowing have higher credit card debts and demonstrate the unwillingness to pay for the made borrowings regularly.

It is also important to state that the researchers approached the problem of increasing credit card debt rates in the right way because much attention was paid to the individual factor as the main aspect to influence the problem of credit card debt concerning the U.S. households’ borrowings. Furthermore, the completed study provides statistically significant and credible results and findings because it is based on the data received from the experiment as well as on the administrative data. As a result, the factor of bias that is associated with observing and analyzing the debt levels that can be self-reported by the participants is decreased.


Meier, S., & Sprenger, C. (2010). Present-biased preferences and credit card borrowing. American Economic Journal: Applied Economics, 2(1), 193-210.

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