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Measuring Aversion to Debt : An Experiment among Student Loan Candidates

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dc.contributor.authorCaetano, Gregorio
dc.contributor.authorPatrinos, Harry A.
dc.contributor.authorPalacios, Miguel
dc.date.accessioned2012-03-19T18:03:33Z
dc.date.available2012-03-19T18:03:33Z
dc.date.issued2011-07-01
dc.description.abstractThis paper reports the results of an experiment designed to test for the presence of debt aversion. The population who participated in the experiment were recent financial aid candidates and the experiment focused on student loans. The goal is to shed new light on different aspects of the perceptions with respect to debt. These perceptions can prevent agents from choosing an optimal portfolio or from undertaking attractive investment opportunities, such as in education. The study design disentangles two types of debt aversion: one that is studied in the previous literature, which encompasses both framing and labeling effects, and another that controls for framing effects and identifies only what we denote labeling debt aversion. The results suggest that participants in the experiment exhibit debt aversion, and most of the debt aversion is due to labeling effects. Labeling a contract as a "loan"' decreases its probability of being chosen over a financially equivalent contract by more than 8 percent. The analysis also provides evidence that students are willing to pay a premium of about 4 percent of the financed value to avoid a contract labeled as debt.en
dc.identifierhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110726094406
dc.identifier.doi10.1596/1813-9450-5737
dc.identifier.urihttps://hdl.handle.net/10986/3499
dc.languageEnglish
dc.relation.ispartofseriesPolicy Research working paper ; no. WPS 5737
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCESS TO HIGHER EDUCATION
dc.subjectAMOUNT OF DEBT
dc.subjectAMOUNT OF RISK
dc.subjectASSET PRICES
dc.subjectASSET PRICING
dc.subjectASSETS
dc.subjectASYMMETRIC INFORMATION
dc.subjectBANKRUPTCY
dc.subjectBANKRUPTCY LAWS
dc.subjectBORROWER
dc.subjectBORROWING
dc.subjectCAPITAL INVESTMENT
dc.subjectCAPITAL RETURNS
dc.subjectCAREER
dc.subjectCAREER CHOICE
dc.subjectCOLLATERAL
dc.subjectCOST-SHARING
dc.subjectCREDIT CONSTRAINTS
dc.subjectCREDIT INSTRUMENT
dc.subjectDEBT
dc.subjectDEBT BURDEN
dc.subjectDEBT CONTRACT
dc.subjectDEMOGRAPHIC CHARACTERISTICS
dc.subjectDEPENDENT
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT POLICY
dc.subjectEARNINGS
dc.subjectECONOMIC RESEARCH
dc.subjectECONOMICS LITERATURE
dc.subjectEDUCATION COSTS
dc.subjectEDUCATIONAL FINANCE
dc.subjectEMPLOYMENT
dc.subjectEQUITY INVESTMENTS
dc.subjectFINANCIAL AID
dc.subjectFINANCIAL CONTRACT
dc.subjectFINANCIAL INSTITUTION
dc.subjectFINANCIAL INSTRUMENT
dc.subjectFINANCIAL TRANSACTION
dc.subjectFLEXIBLE LOAN
dc.subjectFUTURE RESEARCH
dc.subjectGENDER
dc.subjectHIGH SCHOOL GRADUATES
dc.subjectHIGHER EDUCATION
dc.subjectHIGHER EDUCATION FINANCING
dc.subjectHUMAN CAPITAL
dc.subjectHUMAN CAPITAL INVESTMENT
dc.subjectHUMAN DEVELOPMENT
dc.subjectIMPACT OF DEBT
dc.subjectINCOME
dc.subjectINCOME CONTINGENT LOANS
dc.subjectINCOME LEVEL
dc.subjectINCOME LEVELS
dc.subjectINCOME-CONTINGENT
dc.subjectINCOMPLETE MARKETS
dc.subjectINFORMATION ASYMMETRY
dc.subjectINTERNATIONAL BANK
dc.subjectINVESTMENT DECISION
dc.subjectINVESTMENT DECISIONS
dc.subjectINVESTMENT OPPORTUNITIES
dc.subjectINVESTMENTS IN EDUCATION
dc.subjectLEGAL BARRIERS
dc.subjectLEVELS OF EDUCATION
dc.subjectLOAN CONTRACT
dc.subjectLOANS TO STUDENTS
dc.subjectLOCAL CURRENCIES
dc.subjectLOCAL CURRENCY
dc.subjectLOTTERY
dc.subjectLOW-INCOME STUDENTS
dc.subjectMONETARY VALUE
dc.subjectOPEN ACCESS
dc.subjectPAPERS
dc.subjectPAYOFFS
dc.subjectPORTFOLIO
dc.subjectPORTFOLIO CHOICE
dc.subjectPOTENTIAL BORROWERS
dc.subjectPOTENTIAL INVESTORS
dc.subjectPUBLIC EDUCATION
dc.subjectPUBLIC FINANCE
dc.subjectRETURN
dc.subjectRISK-AVERSE INDIVIDUALS
dc.subjectSHAREHOLDER
dc.subjectSTUDENT LOAN
dc.subjectSTUDENT LOANS
dc.subjectTANGIBLE ASSET
dc.subjectTITLE
dc.subjectTRANSACTION
dc.subjectTRANSFER RISK
dc.subjectTYPES OF DEBT
dc.subjectUNIVERSITIES
dc.subjectVALUE OF DEBT
dc.subjectWAGES
dc.titleMeasuring Aversion to Debt : An Experiment among Student Loan Candidatesen
dspace.entity.typePublication
okr.crossref.titleMeasuring Aversion to Debt: An Experiment Among Student Loan Candidates
okr.date.disclosure2011-07-01
okr.date.doiregistration2025-04-10T11:20:09.343834Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110726094406
okr.globalpracticeEducation
okr.guid875171468183545929
okr.identifier.doi10.1596/1813-9450-5737
okr.identifier.externaldocumentum000158349_20110726094406
okr.identifier.internaldocumentum14652864
okr.identifier.reportWPS5737
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/07/26/000158349_20110726094406/Rendered/PDF/WPS5737.pdfen
okr.region.administrativeThe World Region
okr.region.administrativeThe World Region
okr.topicTertiary Education
okr.topicEducation
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isAuthorOfPublicationc9e7c391-9af8-566a-8bb3-cc917745467c
relation.isAuthorOfPublication.latestForDiscoveryc9e7c391-9af8-566a-8bb3-cc917745467c
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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