A ban on very short-term loans at very high annualized interest rates (aka payday lending) would make most people who use or might use them better off.
Responses
Responses weighted by each expert's confidence
Participant | University | Vote | Confidence | Bio/Vote History |
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Daron Acemoglu |
MIT | Bio/Vote History | ||
There is a demand for these loans, but also miscalculations and longer-term problems for borrowers, including for their families.
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Alberto Alesina |
Harvard | Bio/Vote History | ||
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
You've set the bar high: "very short-term loans at very high annualized interest rates." So I'll say that these loans benefit few people
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Katherine Baicker |
University of Chicago | Bio/Vote History | ||
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Did Not Answer | Bio/Vote History | |
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
This does not mean regulation of the sector's practices is unwarranted, but the research on access to credit is pretty clear.
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
Seem like good arguments on both sides
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Darrell Duffie |
Stanford | Bio/Vote History | ||
Meltzer (2011) finds that payday loans do not alleviate hardship. But banning the market may be dominated by stronger regulation.
-see background information here |
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
Disclosure rules and banning rollover makes more sense. Sometimes people need credit.
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Bio/Vote History | ||
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Austan Goolsbee |
Chicago | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
The best evidence (see link) finds sharp welfare declines from interest rate caps in a somewhat similar market.
-see background information here |
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Robert Hall |
Stanford | Bio/Vote History | ||
Some would gain and some would lose—payday loans are not all harmful
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Oliver Hart |
Harvard | Bio/Vote History | ||
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
It depends on what would replace payday loans as a source of short-term liquidity. Better information & lending mechanisms need to be tried.
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
Better would be to provide some regulation of interest rates.
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Kenneth Judd |
Stanford | Bio/Vote History | ||
I generally favor allowing voluntary transactions, but I suspect that demand is usually driven by behavior inconsistent with rationality.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
i doubt it is a generically good idea, but the research is very mixed, despite many, many papers; see the literature review by morgan et al
-see background information here |
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Pete Klenow |
Stanford | Bio/Vote History | ||
Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
Payday loans at usurious interest rates exploit borrowers' ignorance.
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William Nordhaus |
Yale | Bio/Vote History | ||
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
Most $ spent are heavy users which does not seem like a good arrangement. Occasional users can benefit. More wealth at bottom would be best.
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Larry Samuelson |
Yale | Bio/Vote History | ||
A ban would help those exploited by PD loans, but would harm those for whom such loans are a lifeline. "Most" is difficult to determine.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
There is evidence that taking a payday loan increases bankruptcy but should first try other measures such as enforcing better disclosure.
-see background information here |
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Richard Schmalensee |
MIT | Bio/Vote History | ||
On the one hand, some are victimized; on the other, some have no other source of needed credit. Not an easy call without facts.
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
A complete ban seems extreme as a way of protecting borrowers from predatory lending.
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
No evidence of market power in this industry, so this seems to go against revealed preference. What markets arise if this is banned?
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James Stock |
Harvard | Bio/Vote History | ||
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
Loan sharks may be worse.
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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