Dan Herbst
@danherbst.bsky.social
Econ Prof at University of Arizona. Interested in labor, public, & household finance. Also a fan of dogs & motorcycles. www.danjherbst.com
12/ We also find causal evidence place-based effects on repayment: using a mover's design, we find that childhood exposure to places with better repayment behaviors leads to lower delinquency rates in adulthood, even conditional on adult income.
July 17, 2025 at 1:17 PM
12/ We also find causal evidence place-based effects on repayment: using a mover's design, we find that childhood exposure to places with better repayment behaviors leads to lower delinquency rates in adulthood, even conditional on adult income.
11/ Instead, we find that childhood factors play a role--the credit scores of your parents and childhood neighbors predict your later-life repayment, even conditional on income, wealth, and education.
July 17, 2025 at 1:17 PM
11/ Instead, we find that childhood factors play a role--the credit scores of your parents and childhood neighbors predict your later-life repayment, even conditional on income, wealth, and education.
8/ But when it comes to *balance* bias, the answer is yes: among those who end up avoiding delinquency, Black individuals and those from low-income backgrounds received lower initial scores than other groups.
July 17, 2025 at 1:17 PM
8/ But when it comes to *balance* bias, the answer is yes: among those who end up avoiding delinquency, Black individuals and those from low-income backgrounds received lower initial scores than other groups.
7/ When it comes to *calibration* bias, the answer is no: Among those with a given credit score, Black individuals or those from low-income backgrounds actually fall delinquent at higher rates than other groups. In other words, the credit-score gap understates the repayment gap.
July 17, 2025 at 1:17 PM
7/ When it comes to *calibration* bias, the answer is no: Among those with a given credit score, Black individuals or those from low-income backgrounds actually fall delinquent at higher rates than other groups. In other words, the credit-score gap understates the repayment gap.
4/ We also see large differences by hometown. For example, by the time they're adults, low-income White children from Brooklyn, NY have 90-point higher average credit scores than low-income White children from Indianapolis.
July 17, 2025 at 1:17 PM
4/ We also see large differences by hometown. For example, by the time they're adults, low-income White children from Brooklyn, NY have 90-point higher average credit scores than low-income White children from Indianapolis.
3/ Black individuals and those born to low-income parents have much lower credit scores than other groups. For example, Black individuals from the 90th pctile of parent income have similar average credit scores as White individuals from the 25th pctile.
July 17, 2025 at 1:17 PM
3/ Black individuals and those born to low-income parents have much lower credit scores than other groups. For example, Black individuals from the 90th pctile of parent income have similar average credit scores as White individuals from the 25th pctile.
What does this mean for worker welfare? Estimates of marginal values imply a welfare loss of around $0.05 per hour worked. If you consider the vast number of jobs that involve some degree of self-employment, freelance work, or piece-rate compensation, that's a hefty social cost.
10/n
10/n
December 11, 2024 at 3:37 PM
What does this mean for worker welfare? Estimates of marginal values imply a welfare loss of around $0.05 per hour worked. If you consider the vast number of jobs that involve some degree of self-employment, freelance work, or piece-rate compensation, that's a hefty social cost.
10/n
10/n
Using the wage offer as an instrument, I identify moral hazard as the treatment effect of fixed wages on worker output.
Meanwhile, I identify adverse selection by comparing output between workers on the same payment scheme who faced different initial wage offers.
7/n
Meanwhile, I identify adverse selection by comparing output between workers on the same payment scheme who faced different initial wage offers.
7/n
December 11, 2024 at 3:37 PM
Using the wage offer as an instrument, I identify moral hazard as the treatment effect of fixed wages on worker output.
Meanwhile, I identify adverse selection by comparing output between workers on the same payment scheme who faced different initial wage offers.
7/n
Meanwhile, I identify adverse selection by comparing output between workers on the same payment scheme who faced different initial wage offers.
7/n
These distortions can lead to a shortage of fixed-wage jobs. For example, if hourly wages attract low-productivity workers, those with higher productivity might fail to find hourly work, even if they're willing to accept an hourly wage below the marginal value of their labor product.
4/n
4/n
December 11, 2024 at 3:37 PM
These distortions can lead to a shortage of fixed-wage jobs. For example, if hourly wages attract low-productivity workers, those with higher productivity might fail to find hourly work, even if they're willing to accept an hourly wage below the marginal value of their labor product.
4/n
4/n