Do Debit Cards Increase Household Spending? Evidence from a Semiparametric Causal Analysis of a Survey

Authors: 
Andrea Mercatanti, Fan Li
Bank of Italy, Duke University

Aug 8 2014

Motivated by recent findings in the field of consumer science, this paper evaluates the causal effect of debit cards on household consumption using population-based data from the Italy Survey of Household Income and Wealth (SHIW). Within the potential outcome framework to causal inference, we focus on the estimand of population average treatment effected for the treated (PATT). We consider three existing estimators, based on regression, mixed matching and regression, propensity score weighting, and propose a new doubly-robust estimator. Semiparametric specification based on power series for the potential outcomes and the propensity score is adopted. Cross validation is used to select the order of the power series. The key assumptions, overlap and unconfoundedness, are systematically assessed and validated in the application. Our empirical results suggest statistically significant positive effects of debit cards on the monthly household spending in Italy.

Keywords: 

causal inference, potential outcomes, payment instruments, power series, propensity score, overlap, unconfoundedness

Manuscript: 

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