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  2. ASSA Annual Meeting
  3. 2026
  4. Program
  5. New Developments in Household Finance
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New Developments in Household Finance

Paper Session

Saturday, Jan. 3, 2026 10:15 AM - 12:15 PM (EST)

Loews Philadelphia Hotel, Commonwealth Hall D
Hosted By: American Finance Association
  • Anthony DeFusco, University of Wisconsin-Madison

The Effects of Deleting Medical Debt from Consumer Credit Reports

Victor Duarte
,
University of Illinois
Julia Fonseca
,
University of Illinois
Divij Kohli
,
University of Illinois
Julian Reif
,
University of Illinois

Abstract

One in seven Americans carry medical debt, with $88 billion reported on consumer credit reports. In April 2023, the three major credit bureaus stopped reporting medical debts below $500. We study the effects of this information deletion on consumer credit scores, credit access, repayment behavior, and payday borrowing. Contrary to expectations that removing this negative credit information would improve credit outcomes for affected individuals, we find no evidence of benefits. Regression discontinuity estimates comparing individuals just above and below the $500 threshold rule out even small effects. To interpret these findings, we build credit scoring models using machine learning techniques and show that small medical debts provide no meaningful predictive information for default, implying that they contribute little to credit risk assessment. We further show that larger medical debts (≥ $500) are similarly uninformative, suggesting that eliminating medical debts entirely from credit reports, as planned under a January 2025 decision by the Consumer Financial Protection Bureau, is unlikely to affect credit outcomes.

The Welfare Benefits of Pay-As-You-Go Financing

Brett Green
,
Washington University in St. Louis
Renping Li
,
Tulane University
David Sraer
,
University of California-Berkeley
Paul Gertler
,
University of California-Berkeley

Abstract

Pay-as-you-go (PAYGo) financing is a novel contract that has recently become a popular form of credit, especially in low- and middle-income countries (LMICs). PAYGo financing relies on lockout technology that enables the lender to remotely disable the flow benefits of collateral when the borrower misses payments. This paper quantifies the welfare implications of PAYGo financing. We develop a dynamic structural model of consumers and estimate the model using a multi-arm, large scale pricing experiment conducted by a fintech lender that offers PAYGo financing for smartphones. We find that the welfare gains from access to PAYGo financing are equivalent to a 3.4% increase in income while remaining highly profitable for the lender. The welfare gains are larger for low-risk consumers and consumers in the middle of the income distribution. Under reasonable assumptions, PAYGo financing outperforms traditional secured loans for all but the riskiest consumers. We explore contract design and identify variations of the PAYGo contract that further improve welfare.

How Do Crypto Flows Finance Slavery? The Economics of Pig Butchering

John Griffin
,
University of Texas at Austin
Kevin Mei
,
University of Texas at Austin

Abstract

"Through blockchain addresses, we trace crypto flows and uncover methods commonly used by scammers to obfuscate their activities. The perpetrators interact freely with major crypto exchanges, sending over 98,000 small trust-building inducement payments annually to exchanges commonly used by U.S. and European investors. Funds exit the Ethereum network in large quantities, mostly in Tether, through less transparent but large exchanges. Criminal enterprises
pay approximately 33 basis points in transaction fees and moved $27.8 billion annually into suspicious exchange deposit accounts between 2021-2023, including $5.6 billion annually sent from Western exchanges. Our findings highlight how many actors in the “reputable” crypto industry facilitate criminal capital flows."

Housing and Fertility

Bernardus Doornik
,
Central Bank of Brazil
Dimas Fazio
,
National University of Singapore
Tarun Ramadorai
,
London School of Economics and Imperial College London
Janis Skrastins
,
Washington University in St. Louis

Abstract

This paper examines the impact of access to housing on fertility rates using random variation from housing credit lotteries in Brazil. For 20-25-year-olds, we find that obtaining housing increases the average probability of having a child by 32% and the number of children by 33%, with no increase in fertility for people above age 40. The completed lifetime fertility increase for a 20-year-old is twice as large from obtaining housing immediately compared to obtaining it at age 30. Individuals relocate to areas with lower crime rates, higher per capita income, and higher home-ownership rates, creating more favorable conditions for raising children. The increase in fertility is stronger for households in areas with lower quality housing, greater rental expenses relative to income, and those with lower household income and lower female income share. These results suggest that easing housing credit and physical space constraints can significantly increase fertility.

Discussant(s)
Raymond Kluender
,
Harvard University
Huan Tang
,
University of Pennsylvania
Paul Goldsmith-Pinkham
,
Yale University
Tim McQuade
,
University of California-Berkeley
JEL Classifications
  • G2 - Financial Institutions and Services