The next installment of “The Myth of the Rational Borrower” by Ted Janger & Susan Block-Lieb is now up on Credit Slips. In this post, the professors examine their predictions about the effects of BAPCA of their “heuristic borrower” is more accurate:
- That the consumer bankruptcy filing rate would fall (no big surprise there).
- That the credit card charge-off rate would fall, but rebound.
- That consumers’ ex ante borrowing decisions would not be altered by restricted availability of the bankruptcy discharge.
The result? Not perfectly right, but right nonetheless. Their hypothesis that the average borrower is not the rational picture the industry likes to pretend in public seems to be about right.
To find a consumer or bankruptcy lawyer, use the Caveat Emptor Consumer & Bankruptcy Lawyer Directory.
