Question A:
An $8 cap on late fees for credit cards, as proposed by the Consumer Financial Protection Bureau, would lead to a substantial reduction in overall costs for consumers.
Responses
Responses weighted by each expert's confidence
Question B:
Requiring that all credit card fees and interest rates be transparent, prominently displayed, and easily searchable online would lead to a substantial reduction in overall costs for consumers.
Responses
Responses weighted by each expert's confidence
Question C:
Consumers would be measurably better off if efforts to reduce the impact of so-called ‘junk fees’ across the economy concentrated on making fees more transparent than on capping specific types of fees.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
 Daron Acemoglu |
MIT | Bio/Vote History | ||
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 Joseph Altonji |
Yale | Bio/Vote History | ||
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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This definitely reduce credit card fees. I also suspect this would it be harder for people with relatively low credit scores to get credit cards. In the worst case, more people low-credit borrowers will be forced to use payday lenders, which will be much more expensive
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 Abhijit Banerjee |
MIT | Did Not Answer | Bio/Vote History | |
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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 Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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The CARD Act evidence suggests fee caps may not be entirely be made up w other fees.
-see background information here |
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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 Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Robert Hall |
Stanford | Bio/Vote History | ||
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The Wall Street Journal, June 17, 2023, surveyed research showing that almost all casual thinking on this topic is quite wrong--transparency and the like steers people in just the wrong direction.
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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For most people, the benefits would be small.
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Credit card companies will adjust prices, products and availability to offset. Overall costs (net of benefits) to consumers not likely decrease much.
Possible for consumers to be worse off.
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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 Pete Klenow |
Stanford | Bio/Vote History | ||
 Jonathan Levin |
Stanford | Bio/Vote History | ||
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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 William Nordhaus |
Yale | Did Not Answer | Bio/Vote History | |
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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 Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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Some consumers will see reduced fees, but some others may be excluded from the market.
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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If the goal is to help relatively low income credit card users, who typically use basic cards, it would be better to cap the interchange fees charged by the duopoly like it was done by the EU.
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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"As much as $9 billion" in savings (per the CFPB) doesn't seem to me to pass the substantiality test in aggregate -- though it may be very important to some.
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Either fees will be shifted elsewhere or consumers who regularly incur late fees will lose access to credit.
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 James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Of course banks can increase other fees, but still the CFPB does seem to have shamed some large banks to eliminate these fees paid mostly by the poor.
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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Perhaps in the short term, but I have little doubt in the capacity of credit card issuers to find innovative ways of hiding charges.
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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It is uncertain whether most customers would search, process and act on this type of information, given busy schedules, other transaction costs and sometimes low financial literacy.
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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This won't hurt. But I don't think it will have a substantial effect. People have self-control problems and succumb to myopic behavior in borrowing and repayment.
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Abhijit Banerjee |
MIT | Did Not Answer | Bio/Vote History | |
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Most of the costs are borne through the effect of merchant fees, especially interchange fees. Consumers bear these indirectly through merchant prices. Consumers will tend to pay more attention to the rewards funded by merchant fees. More competition might backfire. See Wang, 2023
-see background information here |
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Bio/Vote History | ||
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see previous question
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Oliver Hart |
Harvard | Bio/Vote History | ||
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Mixed evidence on effects of transparency to consumers in other arenas.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
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William Nordhaus |
Yale | Did Not Answer | Bio/Vote History | |
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Most consumers dont think these fees will matter to them and won't research them. Those who do get stung with late fees, on the other hand, are painfully aware of them.
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Don’t know whether enough consumers would shop for this to get up to “substantial” but worth doing.
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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Of course, the details matter. I worry that issuers might be similarly creative in circumventing transparency requirements. But a broad requirement of openness might be relatively easy to enforce.
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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I am not convinced that transparency would work by itself. Capping fees could backfire, especially if these caps are excessively tight. But on balance, regulation may be better for ticketing consumers than just transparency. Still there is much uncertainty.
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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I'm not sure that people respond strongly to this type of information. But I favor trying it. There's no good-for-consumer reasons that this information is made obscure. And the fact that is often hidden suggests that lenders believe that revealing it would save consumers money.
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Abhijit Banerjee |
MIT | Did Not Answer | Bio/Vote History | |
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Consumers are not so attentive to banking markups. For example, they have trillions of dollars of deposits on which the receive almost no interest.
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Bio/Vote History | ||
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again, see first question
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Oliver Hart |
Harvard | Bio/Vote History | ||
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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I doubt any regulator could find a good set of caps nor could one change the caps in response to new conditions. Transparency is better.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Not sure what transparency does, but better than fixing prices / capping fees. Generally not a good idea to fix prices / cap fees.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
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I don't know whether consumers are rational enough to do better with transparency than with a paternalistic cap.
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William Nordhaus |
Yale | Did Not Answer | Bio/Vote History | |
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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The policies are complementary, and versions of both could be pursued.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Some fees are so egregious that consumers may not even search for them. At a minimum, forcing firms to display an all inclusive cost at the time of booking or ordering, is necessary.
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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This is the standard economist's line, but I don't think it works well for fees that most people can rationally ignore because they are unlikely to pay them. (Does everyone on this panel know the late fees for all -- or even any -- of their cards?)
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Especially true for mortgages.
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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