Accepted Papers


Journal of Financial Economics, Volume 150, Issue 2, November 2023

Debt-repayment flexibility should help temporarily liquidity-constrained households but not necessarily households struggling to save. In a natural experiment in which households can apply for free mortgage-repayment flexibility, I find that two-thirds of liquidity-constrained applicants with high-cost debt voluntarily restrict flexibility and forgo, on average, 4,070 EUR of low-cost liquidity. An overconsumption tendency reflecting self-control problems can explain the voluntary liquidity restrictions as well as the persistent liquidity constraints, the consumption drop at the predictable end of flexibility, and saving in other illiquid assets. Self-imposed liquidity constraints reflect characteristics instead of circumstances and reduce the potency of debt-forbearance offers in recessions.

Journal Version SSRN Working Paper Accepted Version PDF


Accepted for publication in the Review of Economics and Statistics

I study how intra-household frictions and anchoring contribute to the credit card debt puzzle, the co-holding of high-cost debt and low-yield liquid assets. First, I find couples co-hold 42 percent more as units than as individuals relative to income. Moreover, in a natural experiment, couples do not cooperate to reduce high-cost debt, suggesting that intra-household frictions contribute to co-holding. Second, I find individuals who regularly make credit card debt payments equal to or near the minimum account for 59 percent of individual co-holding. The evidence suggests anchoring to the minimum payment contributes to co-holding via these low payments.

Journal Version SSRN Working Paper Accepted Version PDF

Working Papers


with Tuomo Virkola

We study whether people spend in anticipation of predictable inheritances from elderly parents or act as if inheritances are unpredictable windfalls. Implying incomplete anticipation, children increase car purchases by 36 percent after non-sudden parental death. Moreover, pre-inheritance spending, labor supply, and borrowing behavior indicate little to no anticipation. Standard life-cycle explanations (liquidity constraints, uncertainty, news, mortality beliefs) do not seem to explain the incomplete anticipation, suggesting behavioral or strategic explanations (mental accounting, norms, inheritance division). Given the size of inheritances, our results imply a high-stakes deviation from life-cycle consumption smoothing. Moreover, incomplete anticipation reduces the value of parental inheritances.

SSRN Working Paper


with Samuli Knüpfer, Ville Rantala, and Petra Vokata

We study household responses to “phantom riches”—the illusion of attaining substantial wealth—by using administrative data on Ponzi scheme investors. An event-study design exploiting staggered entry shows investors experience a 6 percent labor income loss. Income first declines when an investor joins the scheme, consistent with distorted beliefs lowering labor supply. The scheme’s collapse evokes a further decrease, which we attribute to financial stress caused by the collapse. Investors also face higher unemployment and indebtedness and shy away from delegated investments. The long-run income loss twice exceeds the direct investment loss and substantially adds to the social cost of fraud.

SSRN Working Paper

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