--Jane Dokko, Geng Li, and Jessica Hayes, "Credit Scores and Committed Relationships," on the link between financial responsibility and relational success
Wednesday, July 22, 2015
Hey, baby, what's your credit score?
This paper presents novel evidence on the role of credit scores in the dynamics of committed relationships. We document substantial positive assortative matching with respect to credit scores, even when controlling for other socioeconomic and demographic characteristics. ... Moreover, we find that the couple’s average credit score and the match quality in credit scores, measured at the time of relationship formation, are highly predictive of subsequent separations. This result arises, in part, because initial credit scores and match quality predict subsequent credit usage and financial distress, which in turn are correlated with relationship dissolution. Also, even beyond these channels, credit scores and match quality appear predictive of subsequent separations, suggesting that credit scores reveal an important personal skill and attitude. Among the many possibilities, we argue that one such skill and attitude could be an individual’s trustworthiness and present ancillary evidence supporting this interpretation.