Consumer Credit: Learning Your Customer's Default Risk from What (S)He Buys

53 Pages Posted: 15 Mar 2010

See all articles by Annette Vissing-Jorgensen

Annette Vissing-Jorgensen

Federal Reserve Board; National Bureau of Economic Research (NBER)

Date Written: November 24, 2009

Abstract

The paper contributes to understanding the economics of the big data revolution in consumer credit
scoring. I link consumer spending patterns (what consumers buy) to consumer credit outcomes using survey data from the US Consumer Expenditure Survey and account-level data from a Mexican retail chain that sells durables on credit. In both datasets, spending on entertainment (such as video, audio, magazines, newspapers, toys and pets) predicts worse credit outcomes. Spending on categories that predict worse consumer credit outcomes tend to also predict smoking and lower education (proxies for impatience), suggesting that impatience is central for consumer credit outcomes.

Keywords: Consumer credit, default

JEL Classification: D1

Suggested Citation

Vissing-Jorgensen, Annette, Consumer Credit: Learning Your Customer's Default Risk from What (S)He Buys (November 24, 2009). Available at SSRN: https://ssrn.com/abstract= or http://dx.doi.org/10.2139/ssrn.1570812

Annette Vissing-Jorgensen (Contact Author)

Federal Reserve Board ( email )

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Washington, DC 20015
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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