Fed/GFLEC Financial Literacy Seminar Series

March 7, 2019

3:30 PM - 5:00 PM

Seminar I | Interest Rates: Prices Hidden in Plain Sight

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Mary Zaki

Assistant Professor, University of Maryland



George Washington University School of Business
Duquès Hall, Minerva Room (451)
2201 G Street NW
(main entrance is on 22nd Street between G and H Streets)

Bio: Mary Zaki

Mary Zaki is an Assistant Professor in the Department of Agricultural and Resource Economics of the University of Maryland. Her research focuses on household finance and food consumption issues especially among low-income populations. She currently is studying household spending patterns between paycheck receipts, the effects of high cost credit on food consumption, the relationship between pay frequency and price-saving shopping activities, the effects of social welfare program work-requirements on labor outcomes, the effects of credit instrument disclosures on consumer understanding and subsequent borrowing and purchasing decisions, the effectiveness of food access programs in food deserts and the effect of school breakfast program expansions on student health outcomes and test scores. She received her B.S. and B.A. in Economics from the University of Pennsylvania and her M.S. and Ph.D. in Economics from Northwestern University.


I construct a new record of credit terms from mail-order catalogs of the 20th Century and find that when creditors switched from dollar to interest rate price disclosure in the 1960s, prices starkly jumped and price sensitivity to cost-of-funds diminished. I investigate possible explanations by using accompanying historical evidence and conjecture that the shift in price disclosure method diminished consumer ability to determine credit cost obligations and subsequently creditor incentives to compete on price. In an experiment I find that interest rate price disclosures do indeed prevent consumers from determining cost obligations, leading to insensitivity to price and non-optimal borrowing and purchasing.