Authors: Raffi E. García and Jyothsna G. Harithsa
Journal: AEA Papers and Proceedings
Abstract: This paper analyzes the effects of high economic uncertainty on racial and gender behavior in payment methods. Using US consumer transaction-level data, we find that consumers alter their payment behavior patterns in periods of high economic uncertainty by moving away from costly and risky payment methods with high interest rates, such as credit cards. We find that females reduce their cash usage but increase their credit card usage relative to males, thus exposing themselves to higher financial vulnerability. We find no major differences in payment behavior between Blacks and Whites.
Key Findings
- The results provide empirical evidence that, under high uncertainty, consumers move away from payment methods that seem more costly and risky with high transaction fees or interest rate charges, such as credit cards, and tend to use more cash instead.
- We find no statistically significant differences in credit card or cash usage across genders.
- We do find that females reduce their use of wire transfers and alternative payment methods relative to males.
- We find no significantly different behavior between Black and White respondents.
Citation: Garcia, Raffi E., and Jyothsna G. Harithsa. 2024. “Gender and Racial Behavior in Consumer Payment Methods under Economic Uncertainty.” AEA Papers and Proceedings 114: 174–79. DOI: 10.1257/pandp.20241103
