Even the best-intentioned policies can fail prey to the oddity
of human behavior, as a new study of credit-card repayment finds. In order to
stop borrowers from being hit by an accumulation of unpaid interest whenever
they fail to pay their bill, there are laws requiring credit-card companies to
specify a minimum payment in each statement. But these may do more harm than
good, suggests Neil Stewart, a psychologist at Warwick University.
Mr. Stewart was studying a phenomenon known as "anchoring". Psychologists
have found that being exposed to numbers, even irrelevant ones, can affect
people’s decisions. For example, diners tend to spend more in a restaurant named
"Cafe 97" than in one named "Cafe 17". Since minimum payments on credit-card
statements are usually small amounts, Mr. Stewart wondered whether seeing an
actual amount might make people pay less than they would otherwise have done.
That is exactly what he found. Mr. Stewart presented 413 people
with fake credit-card bills of S 435.76 that were identical -- except that only
half mentioned a minimum payment of ￡5.42. Participants were asked how much they
would pay. Among those inclined to pay the bill in full, the
presence of the minimum payment hardly made any difference. However, those who
wanted to pay just part of it handed over 43% less on average when presented
with a minimum payment. In the real world, this would roughly double interest
charges. Economists will be interested in the results.
Behavioral economists advocate" nudging(用肘轻推)" people in the right direction by
subtly altering the choices that they are presented with. The insistence on
minimum payments is a variation on this theme. Supposedly, those confronted by
minimum-payment requirements should pay at least that much. In fact Mr.
Stewart’s work suggests that people who would have paid a lot, paid less. In
economics, as in life, nudging needs to be done carefully. That diners spend more in a restaurant named "Cafe 97" than in one named "Cafe 17" shows numbers can