The authors use survey data from 1,026 Swedish households and investigate how impulsive buyers handle a hypothetical 20,000 Swedish kronor (SEK) unexpected expense and a 3-6 month sharp decline in income. Results indicate that impulsive buyers are more likely to lower their standard of living or move out to cut overhead costs when facing income declines. As a transmission channel, we find that impulsive buyers are more likely to run out of money before month-end, and such liquidity shortages are strongly associated with reduced ability to handle financial emergencies. Overall, our findings identify impulsive spending as an important behavioral factor related to households’ lack of preparedness for financial emergencies.
The seminar will be held in English.
