Michael E Staten

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Scholarly Contributions

Books

• Elliehausen, G., Zywicki, T., & Durkin, T. (2014). RC1: Consumer Credit and the American Economy (listed in prior year, published this year). Oxford University Press: Oxford University Press.
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  This book examines the economics, behavioral science, sociology, history, institutions, law and regulation of consumer credit in the United States. It looks at why Americans use credit in their everyday lives and the implications for credit use for the American economy and government regulation. The authors examine demand, supply, trends, growth, technological changes, regulatory structure, and other market phenomena. The book challenges stereotypical views and provides an economically informed way of looking at how and why consumers use credit.

Journals/Publications

• Ray, D. T., Winzerling, J. J., & Staten, M. E. (2017). Career Skills: Our Process and Where we are Today. HortTechnology, 27(5), 586-590. doi:10.21273/HORTTECH03671-17
• Staten, M. E. (2015). Risk-Based Pricing in Consumer Lending. Journal of Law, Economics and Policy, 11(1), 33-57.
• Eades, K., Fox, J., & Keown, A. (2013). The Role of Professors in Improving Financial Literacy: Roundtable Session Highlights from the 2012 FMA Annual Meeting. Journal of Applied Finance, 23, 138-144.
• Smith, L. D., Staten, M., Eyssell, T., Karig, M., Freeborn, B. A., & Golden, A. (2013). Accuracy of information maintained by us credit bureaus: Frequency of errors and effects on consumers' credit scores. Journal of Consumer Affairs, 47(3), 588-601.
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  Abstract: A representative sample of 1,000 US consumers reviewed their credit reports from the three major US credit bureaus with help from university research associates. Twenty-six percent of study participants claimed to find at least one potentially material error and filed formal disputes with the relevant bureau(s). For 78% of the 263 consumers who filed disputes (20% of participants overall) at least one bureau altered the credit report accordingly. Thirty-three percent of disputants (8.7% of participants) experienced a resulting increase of 10+ points in one or more of their FICO® scores; 21% of disputants (5.5% of study participants) had one or more scores cross a threshold that would typically result in more favorable terms of credit. Our findings suggest that credit-bureau data are accurate enough to facilitate efficient lending and creditors' management of accounts, but individual consumers need to be vigilant to protect themselves against potentially costly errors in their files. Copyright 2013 by The American Council on Consumer Interests.
• Staten, M. E., Smith, D., Freeborn, B., Golden, A., Eyssell, T., & Karig, M. (2013). Accuracy of Information Maintained by U.S. Credit Bureaus: Frequency of Errors and Effects on Consumers. Journal of Consumer Affairs, 47(3), 588-601.
• Brown, D. T., Link, C. R., & Staten, M. E. (2012). The success and failure of counseling agency debt repayment plans. Eastern Economic Journal, 38(1), 99-117.
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  Abstract: This paper investigates whether success on a counseling agency-administered Debt Management Plan (DMP), as measured by the amount of original debt repaid, can be predicted at the time of counseling based on observable client and debt attributes. The paper utilizes a unique database of over 17,000 consumers who were counseled and recommended for a DMP by a large non-profit credit counseling agency during 2003. Of particular interest to counseling agencies and creditors is the finding that the magnitude of the interest rate reduction offered by creditors to consumers on a DMP has a significant, positive influence on debt repayment.
• Barron, J. M., Chong, B., & Staten, M. E. (2008). Emergence of captive finance companies and risk segmentation in loan markets: Theory and rvidence. Journal of Money, Credit and Banking, 40(1), 173-192.
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  Abstract: A seller with some degree of market power in its product market can earn rents. In this context, there is a gain to granting credit to purchase of the product and thus to the establishment of a captive finance company. This paper examines the optimal behavior of such a durable good seller and its captive finance company. The model predicts a critical difference between the captive finance company's credit standard and that of independent lenders ("banks"), namely, that the captive finance company will adopt a more lenient credit standard. Thus, we should expect the likelihood of repayment of a captive loan to be lower than that of a bank loan, other things equal. This prediction is tested using a unique data set drawn from a major credit bureau in the United States, and the evidence supports the theoretical prediction. © 2008 The Ohio State University.
• Elliehausen, G., Staten, M. E., & Steinbuks, J. (2008). The effect of prepayment penalties on the pricing of subprime mortgages. Journal of Economics and Business, 60(1-2), 33-46.
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  Abstract: This paper investigates the effect of prepayment penalties on the pricing of subprime residential mortgages. The paper is the first to consider that mortgage price and prepayment penalty may be chosen jointly, making single-equation estimates of the effect of prepayment penalty on price biased. Using a model that accounts for endogeneity of price, loan to value, and prepayment penalty, we find that prepayment penalties are associated with lower loan prices. This finding is important because perceptions that prepayment penalties harm borrowers have led many states to restrict their use, regulation that may reverse the gains in credit availability achieved over the last decade. © 2007 Elsevier Inc. All rights reserved.
• Elliehausen, G., Lundquist, E. C., & Staten, M. E. (2007). The impact of credit counseling on subsequent borrower behavior. Journal of Consumer Affairs, 41(1), 1-28.
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  Abstract: The study examined the impact of individualized credit counseling delivered to nearly 8,000 consumer clients during 1997. Credit bureau data provided objective measures of credit performance at a variety of margins between 1997 and 2000 for counseled clients, relative to a comparison group of uncounseled borrowers. Receipt of counseling was associated with a positive change in borrower credit profiles. Techniques to control for self-selection into counseling reveal that much of the improvement was attributable to characteristics unique to consumers who sought counseling. But counseling itself was associated with substantial reductions in debt and account usage, and appeared to provide the greatest benefit to those borrowers who had the least ability to handle credit prior to counseling. © 2007 by The American Council on Consumer Interests.
• Staten, M. E., & Yezer, A. (2005). Introduction to the special issues on the subprime mortgage market, part II. Theoretical and empirical studies of subprime lending. Journal of Real Estate Finance and Economics, 30(2), 111-113.
• Elliehausen, G., & Staten, M. E. (2004). Regulation of subprime mortgage products: An analysis of North Carolina's predatory lending law. Journal of Real Estate Finance and Economics, 29(4), 411-433.
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  Abstract: This paper estimates the effect of North Carolina's high-cost mortgage law on the subprime mortgage market in that state. The results indicate that creditors sharply restricted lending to higher risk consumers in North Carolina following passage of the law. Creditors did not restrict lending in neighboring states or to lower risk consumers in North Carolina. These results suggest that the restriction in North Carolina was due to rationing in response to higher costs imposed by the law. The findings of this study are of importance beyond North Carolina. Other states and municipalities have proposed or passed similar or more restrictive laws. These laws risk taking back some of the gains in credit availability that lower income and higher risk consumers gained in the 1990s.
• Staten, M. E., & Yezer, A. M. (2004). Special issue: "Subprime lending: Empirical studies" - Introduction to the special issue. Journal of Real Estate Finance and Economics, 29(4), 359-363.
• Staten, M. E., & Cate, F. H. (2003). The impact of opt-in privacy rules on retail credit markets: A case study of MBNA. Duke Law Journal, 52(4), 745-786.
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  Abstract: U.S. privacy laws are increasingly moving from a presumption that consumers must object to ("opt out" of) uses of personal data they wish to prohibit to a requirement that they must explicitly consent ("opt in" ) to uses they wish to permit. Despite the growing reliance on opt-in rules, there has been little empirical research on their costs. This Article examines the impact of opt-in on MBNA Corporation, a diversified, multinational financial institution. The authors demonstrate that opt-in would raise account acquisition costs and lower profits, reduce the supply of credit and raise credit card prices, generate more offers to uninterested or unqualified consumers, raise the number of missed opportunities for qualified consumers, and impair efforts to prevent fraud. These costs would be incurred despite the fact that as of the end of 2000, only about two percent of MBNA's customers had taken advantage of existing voluntary opportunities to opt out of receiving MBNA 's direct mail marketing offers. If Congress were to adopt opt-in laws applicable to financial information, the impact across the economy on consumers and businesses would be significant.
• Barron, J. M., Staten, M. E., & Wilshusen, S. M. (2002). The impact of casino gambling on personal bankruptcy filing rates. Contemporary Economic Policy, 20(4), 440-455.
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  Abstract: Personal bankruptcies soared in the United States between 1994 and 1998. One activity that can precipitate personal financial crises and that has also experienced dramatic growth is commercial gambling, especially casino gambling. This article builds a simple model of bankruptcy choice and empirically tests the model using unique county-level data on debt, income, household age, population density, and casino gambling as well as state measures of employment and marital stability, health insurance coverage, and garnishment restrictions. The authors find that the proximity of casino gambling appears to be associated with higher bankruptcy rates, but that the local impact is far more pronounced than the influence of casino gambling on the national filing rate. To quantify the magnitude of the impact, the analysis predicts over a 5% decline in 1998 filing rates for counties surrounding a casino, and a 1% decline in the nationwide filing rate if one were to eliminate casino gambling. Consequently, although casino gambling exerts important local effects, nationwide the incidence and growth of casino gambling does not explain much of the rise in bankruptcies during the past decade.
• Carow, K. A., & Staten, M. E. (2002). Plastic choices: Consumer usage of bank cards versus proprietary credit cards. Journal of Economics and Finance, 26(2), 216-232.
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  Abstract: Using survey data from retail and gasoline cardholders, we examine the substitution of general purpose (bank) cards for proprietary cards and how issuers can predict which consumers are most likely to substitute. Convenience and rebates are the primary reasons for using a bank card. However, consumers use their proprietary gasoline cards to keep purchase records and proprietary retail cards to obtain better service. These results help explain the growth in popularity of "co-branded" cards.
• Carow, K. A., & Staten, M. E. (1999). Debit, credit, or cash: Survey evidence on gasoline purchases. Journal of Economics and Business, 51(5), 409-421.
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  Abstract: We analyzed the consumer's payment option to use debit, general purpose credit cards, gasoline credit cards, or cash. Based on the results from a nested multinomial logit model, we found consumers are more likely to use cash when they have less education, lower incomes, are middle-aged, and own fewer credit cards. Debit and credit card users are younger, more educated, and hold more credit cards. Respondents who use their debit card are less likely to use their gasoline credit card. The results suggest that greater debit card usage will place the greatest competitive pressure on the gasoline credit card program. © 1999 Elsevier Science Inc.
• Staten, M., Umbeck, J., & Dunkelberg, W. (1988). Market share/market power revisited. A new test for an old theory. Journal of Health Economics, 7(1), 73-83.
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  PMID: 10288443;
• Staten, M., Dunkelberg, W., & Umbeck, J. (1987). Market share and the illusion of power. Can blue cross force hospitals to discount?. Journal of Health Economics, 6(1), 43-58.
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  PMID: 10282729;Abstract: Researchers in health care financing have claimed that large private insurers like Blue Cross frequently exercise monopsony power to obtain discounts from normal hospital charges. They claim that the monopsony power derives from a large Blue Cross share of a given hospital's patients. This use of market power has been alleged to be an important cause of hospital 'cost shifting', whereby hospitals offset the discount by raising charges to less powerful customers. This paper re-examines both theoretically and empirically the conditions necessary for a private insurer to extract discounts from a hospital. We demonstrate that the theoretical conditions necessary for Blue Cross to force a discount do not exist in the Indiana market. Using revenue data from 110 Indiana hospitals we reject the traditional claim that Blue Cross pays less than other insurers as a function of market share. © 1987.

Presentations

• Staten, M. E. (2015, February). Impact of Falling Oil Prices: Good or Bad Depends on Where you Sit. Thomas R. Brown Foundation Forum: Oil Prices, Good or Bad News?. Eller College of Management, U of Arizona: Thomas R. Brown Foundation and Eller College of Management.
• Staten, M. E. (2015, January). Millennials and Homeownership: Late to the Party or No-Shows?. Gear Up 2015, professional development conference for 200+ Phoenix area realtors, Scottsdale, AZ. Scottsdale, AZ: Take Charge America, Inc. and Wells Fargo.
• Staten, M. E. (2015, June). Ten Big Ideas to Teach About Personal Finance. Teacher Training conference for Phoenix-area finance and economics teachers. Phoenix, AZ: Arizona Council on Economic Education and Take Charge America Institute.
• Staten, M. E. (2015, May). How Much Should We Worry About the Rising Costs of College?. New Hampshire Jump$tart Classroom Connections Conference (teacher professional development). Merrimack, NH at corporate campus of Fidelity Investments: New Hampshire Jump$tart and Fidelity Investments.
• Staten, M. E. (2014, April). Does Financial Education Improve Consumer Outcomes. AREC departmental research workshop series.
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  I presented a seminar in the AREC departmental research seminar series, on research opportunities on the topic of financial education evaluation.
• Staten, M. E. (2013, April). Can Research Help to Build the Policy Case for School-based Financial Education?. Investing in Our Future: A National Conference on Youth Financial Education. Washington, DC: U.S. Consumer Financial Protection Bureau.
• Staten, M. E. (2013, April). Financial Literacy in the Financial Capital of the World, invited panelist. Breakfast panel at the New York Stock Exchange. New York: Council on Economic Education and the NYSE.
• Staten, M. E. (2013, January). The 5 Most Important Concepts to Understand About Borrowing and Credit. Fiscal Fitness Workshop for Teachers, Colorado Jump$tart Coalition. Denver: Colorado Jump$tart Coalition.
• Staten, M. E. (2013, March). National Personal Financial Literacy Standards. Annual Conference, National Association of Economic Educators. St. Louis: National Association of Economic Educators.
• Staten, M. E. (2013, March). Research Findings on Financial Attitudes and Financial Identity of Young Adults. Conference on the Impact of Financial Education. Boston: American Academy of Arts and Sciences.
• Staten, M. E. (2013, May). How Can Behavioral Economics Help Economic Educators?. 2013 Midwest Economic Education Conference. Kansas City: Federal Reserve Bank of Kansas City.
• Staten, M. E. (2013, November). Ten Big Ideas to Teach Students About Personal Finance. 5th Annual Jump$tart Coalition Teachers Conference. Washington, DC: Jump$tart Coalition for Personal Financial Literacy.

Others

• Staten, M. E. (2015, April). Cherry Blossom Financial Education Institute.
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  Co-organized the Cherry Blossom Financial Education Institute on the campus of George Washington University in Washington DC. The Institute used a competitive submission process that generated 65 research papers on all areas of financial education, with special emphasis on those that assessed the effectiveness of financial education and its likely influence on financial behavior or other outcomes. 13 papers were selected for presentation at the conference. I share organizational responsibilities with Prof. Anna Lusardi (GWU) and Prof. William Walstad (U of Nebraska). The Take Charge America Institute also underwrote travel to DC for the paper primary authors.
• Staten, M. E. (2015, March 24). Where Credit Report Reforms Fall Short. Op-Ed piece for the American Banker, appearing March 24 2015.
• Turner, M., & Walker, P. (2015, April). Is CROA Choking Credit Report Literacy?. Monograph, Policy and Economic Research Council, Durham, NC.
• Staten, M. E. (2014, April). RC2: Research Forum on Effectiveness of Financial Education.
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  I organized and hosted an invitation-only Research Forum on Effectiveness of Financial Education, on April 4, 2014 at the UA in McClelland Park. I shared moderator duties with Anna Lusardi (director, Global Financial Literacy Center at George Washington University) and William Walstad (Univ. of Nebraska and Chair, American Economic Association Economic Education Committee). The purpose of the meeting was to convene a group of 15-20 established scholars to discuss what we can do to collaboratively advance the field’s understanding of the effectiveness of financial education. Up until very recently, most prior studies on the effectiveness of financial education programs, especially studies of programs for youth and young adults, have been relatively weak and inconclusive in documenting positive effects of education. This has been for a host of reasons, including • Lack of controls for education treatment• Significant sample selection issues and dearth of randomized control trials• Limited ability to control for other attributes that may influence outcomes, many of which are difficult to measure (e.g. intelligence and numeracy)• Narrow focus on short-term outcome measures, often self-reported• Inability to track and link sample participants to objective measures of behavior over timeThere is a role for rigorous economic research in this area. The meeting was an exploratory event to solicit thoughts and interest in how to address this challenge, and begin framing parameters of a research agenda. The hope was to create an ongoing working group of researchers similarly interested in the topic who would support a multi-year program to increase the quality and rigor of research in the area, encourage collaborative research projects, attract additional funding to the topic, and grow a community of researchers with similar interests.
• Staten, M. E. (2013, February). Evaluator, Center for Financial Services Innovation, Asset Innovation Grant Program.
• Staten, M. E. (2013, March). Reviewer, Pew Charitable Trusts, Peer Review of Safe Checking Project's "Checks and Balances" report. Pew Charitable Trusts.