Intertemporal Consumption and Debt Aversion: A Replication and Extension

TL;DR

This paper replicates and extends Meissner's 2016 study on debt aversion in intertemporal consumption, confirming its findings in a US sample and introducing a new individual index to compare debt aversion across countries and characteristics.

Contribution

It replicates the original study in a different country and introduces a novel index of debt aversion for cross-country comparison and correlation analysis.

Findings

Replicated main findings with similar effect sizes.

Found no significant difference in debt aversion between German and US samples.

Debt aversion correlates with gender, cognitive reflection, and risk aversion.

Abstract

We replicate Meissner (2016), where debt aversion was reported for the first time in an intertemporal consumption and saving problem. While Meissner (2016) uses a German sample, our participants are US undergraduate students. All of the original study's main findings replicate with similar effect sizes. Additionally, we extend the original analysis by introducing a new individual index of debt aversion, which we use to compare debt aversion across countries. Interestingly, we find no significant differences in debt aversion between the original German and the new US sample. We then test whether debt aversion correlates with individual characteristics such as gender, cognitive reflection ability, and risk aversion. Overall, this paper confirms the importance of debt aversion in intertemporal consumption and saving problems and validates the approach of Meissner (2016).