Credit scores and committed relationships

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. As a result, individual-level differences in access to credit are largely preserved at the household level. Moreover, we find that the couples’ average level of 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. Credit scores and match quality appear predictive of subsequent separations even beyond these credit channels, suggesting that credit scores reveal an individual’s relationship skill and level of commitment. We present ancillary evidence supporting the interpretation of this skill as trustworthiness.

That is a new Fed working paper (pdf) by Jane Dokko, Geng Li, and Jessica Hayes.

Comments

Has anybody ever looked at the average credit scores of mass shooters?

Yes, apparently George W. Bush and Barack Obama had good credit scores.

"Average is over baby, we took a shit on the American Dream (yes, it will trickle down, I promise, its like MAGIC), and if you ain't 1% you're lucky to have any job. Good luck getting a scruple of affection from a woman without one - and a family? What are you thinking - like you have dignity or something? Get back to work, do you think I'm paying you 6.5% of your marginal product for nothing?

Just as a footnote we're gonna take away Nembutal and any other way of checking out peacefully when you decide you're not settling for $10 per hour and a 260 pound Gloria Steinem fan with an STD (Hey its in remission she angrily reminds me). Nah, we're gonna take that away from you too. And PS you're evil for not being black, and you're a sexist because you have a penis. Grab your ankles you loser, I'm riding rough." ...is pretty much the tone society is kicking out towards marginalized men today.

A life lacking an iota of hope or dignity, a death from a gunshot wound self inflicted to the head, or a gunshot wound inflicted by others after you kill a few of the people you blame for your problems. Look at the marvels of the importance of consumer preference!

How is this happening? Yes, much more study into this matter is needed. Lets examine their credit scores so we can add some more shame to being poor in America!

I think if these kind of rants didn't inevitably lament the low level of female attractiveness the ranter can attract then they would be taken more sympathetically by listener. It's the urge to equate dignity with access to an attractive mate that short circuits these arguments. I mean sure I wish your options weren't limited to two and threes but that limitation doesn't mean you don't have and aren't offered any dignity.

I'm generally broke and do fine with women. Rants that involve the word "society" are pretty much assured to be pathetic, useless crap.

You can do fine if you're fit and general intelligence suggests a good future.

You cannot do fine if you're a moron and have severe neurotic issues like most of these guys are.

All of these shooters are colloquially labeled "losers" and almost all are involuntarily celibate. The solution is either to make life easier for them, or let them check out peacefully via Nembutal rather than making them go out ugly regardless of whether they take others with them or not.

Peaceful death or violent death with revenge is an easy decision in favor of a peaceful death. Violent death at own hands without revenge or violent death by cops after revenge relies on the good nature of the most marginalized members of society; why are we expecting them to be nice when they have nothing to live for?

I did 170 at 32, and am super fit and tall. My last serious girlfriend was a model who loved to bake. My last fling had qualified for the Olympics

But I have gone through periods of marginalization, and understand the angst these guys go through. I never lost hope my life would turn around, but then again these losers did not start with rich parents, good schools, and good universities.

The response to these shootings has been to look ever more askance at marginalized men. That's not going to help the problem - they're engaging in violence in response to the extreme forms of alienation failed men are subjected to in our society.

You "did 170"? What does that mean? Made $170k?

-10

Has anyone ever looked at the average credit scores by political affiliation?

Yes, according to my informal survey I am pleased to note about 20% of libertarians have no credit score at all and more than 70% had a score either below 310 or above 840 (or both depending on the database used). Less than 10% had a score between 310 and 840.

Anyway, I tossed out the credit score notion because it's not a wholly implausible idea for targeting gun control against the Defective Screw-up demographic that seems to be disproportionately involved in these mass shootings. Perhaps there could be a minimum credit score for buying a gun that would make it harder for the kind of extremely dysfunctional individuals who have accounted for a high proportion of mass shootings in recent years to get guns, while barely inconveniencing everybody else.

A credit score is a reasonable proxy for a track record of responsible behavior, so maybe we could use credit scores as a simple, existing system for distinguishing who appears responsible enough to buy a gun and who is too irresponsible.

It seems like a good topic for somebody to research, so I'm tossing it out there.

If there were a minimum credit score for buying a gun, then the largest employer of the marginalized--the US civil service and military--wouldn't be able to buy any. That probably wouldn't go too well. At least not for us who live in the Mexican Drug Cartel belt.

Credit scores can be ruined for all sorts of reasons beyond irresponsibility. Try having an iCrap-thumbing bankster's wife broadside your car with her Escalade and cause millions in health bills that your HMO won't pay because your employer of 30 years fouled up certain paperwork--accidental or deliberate, it's not possible to tell.

Happened to someone I know, though not well.

Dysfunctional individuals dysfunction, Steve. It's what they do, and they'll do it no matter how the rest of us try or are pressured to take responsibility for their actions.

Or VW executives.

What are the implications for the European Union?

Bugger the EU. What are the implications for house prices?

This paper presents novel evidence on the role of credit scores in the dynamics of committed relationships.

So people without middle class values do not have middle class values? Do tell.

Why would anyone think that this wasn't true? Is it even worth trying to show? People who have short term horizons are unlikely to be good romantic partners just as they are likely to be good loan risks. People who hold to their promises are likely to hold to promises to wives as well as promises to banks.

How is this not a tautology?

"So people without middle class values do not have middle class values?" You mean people that unlike you probably never had the OPPORTUNITY to rise to the middle class.

You have the causality backwards.

Moreno Klaus October 3, 2015 at 7:51 am

You mean people that unlike you probably never had the OPPORTUNITY to rise to the middle class.

You have no idea what my back ground is or is not. I notice that when America imports people from poor countries but with cultures strongly oriented towards middle class American values, Japan, China and Vietnam for instance, they rapidly rise to the middle class. Doesn't look like a lot of obstacles are holding them back to me.

"Why would anyone think that this wasn’t true?"

Why? Because a lot of folks think people with bad credit scores got them through no fault of their own -- not because of impulsive behavior and bad decisions, but because of events beyond their control. Or, alternately, that the bad decisions were not their fault because financial pressures force people to think that way:

http://www.newrepublic.com/article/122887/poor-people-dont-have-less-self-control

I don't think we want to dismiss this view entirely. It's pretty clear that people have differing innate predispositions to responsible behavior, that some cultures are better than others in fostering trustworthiness, and that, yes, financial pressures can cause vulnerable people to behave worse than they would otherwise (especially when it comes to stable relationships). One wants to be charitable to those who have a rough go of it (even when self-defeating behavior is part of the problem) and yet that approach has the potential to undermine the ability of the culture to foster responsibility by rewarding virtue and punishing vice.

Strongly agree. Some people have credit problems because they are impulsive. But plenty of others ran into credit troubles because they got laid off or graduated at a time when it was hard to find work.

What shares in the total of each? If the former predominate, especially for people with middle class lives, then they deserve blame. And I include people with middle class jobs who borrowed with zero percent down to buy a house because it seemed like a good idea, never saved a dime, and then got "unlucky" when their salaries declined. I suspect we have radically different ideas of whom we should have sympathy for.

Buying zero down on the maximum mortgage you qualify for, and then getting a small pay cut is very different from getting laid off and missing three mortgage payments before selling and moving to a smaller home or apartment.

Probably we don't have very different ideas on who to feel sorry for, but have different outlooks on how many people bust their balls and are very prudent, then just get unlucky.

No idea of the stats.

So. I enjoy your excursions into grown-up logic Nathan. Really I do. But how can you claim that stating the exact opposite of what Slocum said is strongly supporting his views? I am intrigued.

Being laid off or graduating at a time when it is hard to find work are precisely the sort of excuse-making Slocum seemed to be referring to, to me. You don't like student debt? Don't do a masters degree in puppetry.

"I don’t think we want to dismiss this view ", "One wants to be charitable to those" (says Slocum)

I'm not taking a strong side in a black and white argument (one side is blame blame blame - no help, the other side is no accountability - bail anyone out). I'm strongly agreeing with precisely what he said.

Please don't try to force me into one of the extremes of the argument. I am perfectly comfortable with the balanced positions put forward by Slocum.

"Being laid off or graduating at a time when it is hard to find work" is excuse making? Since you're so optimistic and smart, why don't you contact both Obama and the Fed and explain to them how you would have created several million jobs out of thin air in 2009? Or, perhaps you're anti-interventionist. In which case, you can legitimize your statement by explaining how highly motivated geniuses in 2009 could have created new jobs in the face of falling aggregate demand.

I have no sympathy for people with a master's degree in puppetry - people who study at a high level in the fine arts know from the get-go that they are almost certainly not going to make much money. Moreover, as usual, you present a rare and extreme position to justify a logic that you wish to apply to the general case. Yet, you wish to sarcastically infer that I'm the one suffering from lack of logic.

Unfortunately I feel that this discussion is frequently between people who are completely unwilling to acknowledge the significance of incentives and those who will always blame people for every misfortune.

Hear, hear. In the majority of, if not most, cases it's along a spectrum.

Keep in mind that when you're poor or even working class, you have limited to zero margin for error. That means that screw-ups (and of course life's little mishaps) which would just mean a minor annoyance and incidental extra expense for a comfortable person could throw a poorer person -- or family -- into a downward spiral.

Maybe for a family. For an individual it's very doable to live on like $6k/yr so I don't think it's easy to be thrown into a downward spiral by an incidental extra expense. Whenever I read a profile of a really poor person and they have like a $100/mo cellphone bill it blows my mind. Not that a cellphone isn't one of the first things you would want, but why why why are they paying more than $30-$40/mo??

To be fair, Cliff, to utilize the primary functions of modern cell phones: text, calls, and data, phone plan prices generally fall well above $40/month for most people. Data costs a lot of money, atleast $20-30/month for a usable amount from AT&T (ie, not 200mb/mo), and data is what makes a modern smartphone what it is.

There's a great scene in "Soul Man" where the Beverly Hills kid is called in by his bank for not paying back his college loans. He explains that he's not some deadbeat who can't afford to pay back his loans, he just hasn't gotten around to paying them back. The banker explains that it's not enough just to have the money you owe, you also have to send it to the bank.

So, if we let people use credit scores to find love, why won't we let employers use them to hire?

They weren't using credit scores to find love. The researchers found out the credit scores after the fact.

Can you imagine wanting a second date with someone who asked your credit score? It's kind of like asking someone's income on a first date. Money matters for relationships, but who wants to have anything to do with people to whom it's THAT important - and moreover, can't they judge based on signals like your iPhone, suit quality, simply reporting job position etc? It's due enough to ask for someone's income (but it happens in Asia all the time ... perhaps they are more practical?)

Dave, last time I checked we *do* let employers get applicants' and employees' credit reports, and *don't* let individuals get potential and actual lovers' credit reports.

I can see dating services asking for permission to run credit reports and get scores, if it were legal.

The lonely lives of Fed researchers.

Probably not. I bet they have great credit scores :)

Not very surprising. Many people with money don't want to be burdened by a partner without money. (People without money easily run into credit problems.) But people without money still want love ...

I don't think the correlation should be surprising, and I'd be cautious when trying to infer a reason for it. Any number of mechanisms (personal responsibility, poor circumstances, whatever) could be postulated that would be correlated to both bad credit and bad relationship outcomes.

The interesting thing here is that this is just more evidence that people are doing a more accurate job of finding mates that are similar to themselves on a whole host of dimensions.

We are all Victorians now.

I wonder if student loans impact family formation? It would be nice if someone would think about possible consequences to putting young people in head-to-head economic competition with prospective spouses and loading them up with thousands of dollars in non-dischargeable debt as a barrier to middle-class living. A some point, surely young people start opting out of this hamster wheel.

Yes. Very difficult to pursue relationships, get married or have children when a quarter or more of your income goes to repaying student loans.

Incentives and free riding aside, I would much rather these costs to be built into my future tax bill, after you actually have a decent income, than front loaded to the time when you are entering a career and earning the least money.

There's no reason for 1/4 of your income to go to repaying student loans. The PAYE formula is 10% of MAGI after excluding 150% of FPL.

Blindingly obvious, if you ask me. I have known people who did credit checks on potential mates not long into a relationship. I have a feeling this may be more common than is realized.

The ability to hide or obscure one's non-bourgeois traits - or to even be a "weekend warrior" - is collapsing. Young people must be expected to present an inter-temporally unified front of pro-social behavior for employers who are digging in to their social media (are you in a relationship? do you post only positive updates and pictures of fun foods in exotic places? that makes you a "rockstar" [which now means well-behaved but also busy and fashionable, kinda sorta like a rockstar but more just like a yuppie]) and credit scores to determine if they're a good "fit" for the company.

You better have it together, and the earlier the better.

My father got into knife fights and stole cars as a teen. He grew up to a enjoy a thriving and solidly paid career. Still at it in his 70s. It's almost impossible to imagine a young person doing the same and looking forward to a bright future today.

Having said all this, I can still admit that somehow this new world might be better?

You want to believe.

Live the dream.

Well it just MAY be better. My dad left a couple of angry and unhappy adults in his wake, from prior marriages wherein he didn't have his act together yet. If the future means that the only people getting the good jobs with good pay and an opportunity to raise a family are those who NEVER fucked up, it could have benefits.

Better?

I doubt it. Young people will still do stupid things. But it will be more difficult to shake the stupid things of your youth, and many will just resign themselves to less ambitious outcomes. Why bother trying when you know you said a bunch of stupid crap on social media as a teenager, and know that SOMEONE, SOMETIME will dredge it up to try to backstab you and get the promotion instead (or some such thing).

Or ... maybe we'll become a more explicitly forgiving society. Apparently America is nominally Christian, but I don't actually think they believe in forgiveness.

Now that gets me wondering...To what extent do we, as a society, want to move away from the Land of Second Chances?

Every indication I've seen over the last few decades is: Quite a bit.

At SXSW 2011, Marissa Mayer (still at Google) said that if you know someone's spending (and presumably can analyze it with the right hardware, software not to mention wetware), you can tell whether or not s/he will get divorced within the next two years.

And be right 49 times out of 50.

I don't believe it

Maybe they were getting more from their inquiry but I don't find a result that says relationships that are faces lower stress tend to last longer all that insightful. I suspect you could ask any low income people if they thought a break up of a couple they now was highly correlated with money and they'd probably think you a daft for having to ask.

In my view we should forget about the score for a moment, it’s more about settling the debt, I got into massive one thanks to stupid broker that I joined, I invested with CC and there I lost it unable to do repayments, but thankfully then came OctaFX broker in my life which is really incredible company with having 50% bonus on deposit, it made my low investment into massive one and allowed me to work to recovery and get rid of the debt which I have done, so worry over the score.

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