Abigail Sussman
Assistant Professor, The University of Chicago Booth School of Business
Assistant Professor, The University of Chicago Booth School of Business
Abigail Sussman is an assistant professor of marketing at the University of Chicago Booth School of Business. She is interested in how consumers form judgments and make decisions, from underlying mechanisms to applications. She investigates questions at the intersection of consumer behavior, psychology, and economics, with the aim of improving human welfare. Her central research examines psychological biases that can lead consumers to commit errors in budgeting, spending, and borrowing. She also explores how the same biases extend beyond financial domains to choices in other areas. Sussman’s prior experience includes work at Goldman Sachs in its equity research division. She earned a bachelor’s degree from Brown University in cognitive science and economics, and a joint PhD from the psychology department and the Woodrow Wilson School of Public and International Affairs at Princeton University.
In recent years, regulators and consumer advocates have focused on improving credit card statements to encourage consumers to repay more of their outstanding debt. For example, the CARD Act of 2009 implemented new requirements for disclosures, including the amount of debt consumers would need to pay each month to clear their balance in three years. However, existing research on the effects of these values is mixed. Presenting minimum payments can actually reduce the amount people pay towards their bill (e.g., Stewart, 2009), while the net effect of the 36-month payoff value was to have a neutral to negative effect on overall payment amounts (Agarwal et al., 2015; Keys & Wang, 2014; Salisbury, 2014).
Examining these questions, research designs are often unable to disambiguate whether these values on credit card statements serve as anchors or as reference points, and researchers have been largely agnostic regarding this distinction. Instead, this literature often refers to minimum values as anchors despite the fact that they appear to have many properties of reference points (e.g., Stewart, 2009; Thaler & Sunstein, 2009). We propose that this distinction may be important for understanding which values can effectively be used to increase payments.
Rather than looking at existing disclosures, we examine additional values that could be presented on statements. We investigate (i) whether additional values on credit card statements can meaningfully influence subsequent payments (ii) whether these values act as anchors or reference points and (iii) when these goals encourage customers to increase their monthly payments. We couple a large dataset of payments from Chase cardholders with several experiments to understand how additional values can differentially influence motivation to repay.
We begin by examining how participants select their payments as a function of values proposed to them on credit card statements (Study 1). In Studies 2 and 3, we investigate whether suggested values take on properties consistent with reference points, namely loss aversion and diminishing sensitivity. We test for loss aversion by examining whether people feel different amounts of satisfaction if an identical payment is above or below the suggested amount. We also examine whether people have higher motivation to pay when they are close to (vs. far away from) their goal. Study 4 examines whether feelings of disappointment track the same patterns as motivation does as payments move away from the suggested amount. To test for the ecological validity of these findings, we turn to a data-set of cardholder payments from a large bank in the US. We examine distributions of payments around values that have been explicitly selected by cardholders as goals, and examine how inclusion of these values alters payments (Study 5). We conclude with a discussion of how our more nuanced understanding of values on credit card statements can be used to encourage debt reduction.