Buy Now, Pay Later Loans, Social Norms, and Consumer Indebtedness.
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| Title: | Buy Now, Pay Later Loans, Social Norms, and Consumer Indebtedness. |
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| Authors: | Ackert, Lucy F. (AUTHOR), Khayati, Amine (AUTHOR), Kelani, Zeynep (AUTHOR) |
| Source: | Journal of Behavioral Finance. Oct-Dec2025, Vol. 26 Issue 4, p558-569. 12p. |
| Subjects: | Social norms, Young consumers, Product positioning, Financial literacy, Installment plan, Empirical research, Consumer credit, Payment |
| Abstract: | The terms associated with new financial products, such as buy now, pay later (BNPL) loans, are often cloudy. Policymakers are concerned because these products are marketed to naïve consumers who may be in financial peril. While financial illiteracy has received attention, it is also important to recognize that consumers are impacted by perceptions of the choices of those in their social network. We elicit empirical and normative expectations in an incentivized experiment to measure what young people think others will do and their beliefs of the beliefs of others. Our experimental participants are more likely to purchase an item with a BNPL loan, as compared to a credit card loan, and the majority believes others see this as a good choice. We conclude that consumers are likely to increase indebtedness when offered a payment scheme that is supported by a social norm. [ABSTRACT FROM AUTHOR] |
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| Database: | Psychology and Behavioral Sciences Collection |
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| Abstract: | The terms associated with new financial products, such as buy now, pay later (BNPL) loans, are often cloudy. Policymakers are concerned because these products are marketed to naïve consumers who may be in financial peril. While financial illiteracy has received attention, it is also important to recognize that consumers are impacted by perceptions of the choices of those in their social network. We elicit empirical and normative expectations in an incentivized experiment to measure what young people think others will do and their beliefs of the beliefs of others. Our experimental participants are more likely to purchase an item with a BNPL loan, as compared to a credit card loan, and the majority believes others see this as a good choice. We conclude that consumers are likely to increase indebtedness when offered a payment scheme that is supported by a social norm. [ABSTRACT FROM AUTHOR] |
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| ISSN: | 15427560 |
| DOI: | 10.1080/15427560.2024.2385898 |
