The practical and theoretical importance of credit card debt cannot be overstated. As a major contributor to household debt levels it plays an important role in the current financial crisis. In testimony to its widespread nature some 180 million Americans currently have a credit card (Lusardi and Tufano 2009) of which approximately half regularly carry unpaid credit card debt (Sprenger and Stavins 2008). Its importance has sparked renewed interest in the study of household finance and high-interest borrowers in particular (Campbell 2006; Lusardi and Mitchell 2008; Agarwal, Driscol, Gabaix and Laibson 2008; Tufano, Maynard and De Neve 2008; Lusardi and Tufano 2009; Zinman 2009). The variables used to explain variation in credit card usage revolve principally around age, gender, ethnicity, income levels, employment, and financial literacy.
In laboratory and real world situations, a correlation has been found between impulsivity and a variety of decision-making domains including financial choices (Frederick 2005; Benjamin, Brown and Shapiro 2006). Because credit card debt is generally viewed as a form of present oriented decision making it has also received the attention of those economists studying intertemporal choices and discounting (Laibson, Repetto and Tobacman 2007; Agarwal, Skiba and Tobacman 2009). A number of such studies find that individual variation in the propensity to make impulsive, present oriented decisions is associated with specific cognitive functions. For example, individual differences in valuing immediate and delayed monetary rewards can be traced to separate neural systems (McClure, Laibson, Loewenstein and Cohen 2004) and processes in the anterior prefrontal cortex, a region in the brain shown to support the integration of diverse information (Shamosh, DeYoung, Green, Reis, Johnson, Conway, Engle, Braver and Gray 2008).
While it is possible that differences in brain activity result from development or environ mental factors, there is a growing body of evidence that suggests some of these differences are influenced by genes. Recent studies using twin design research techniques have been able to gauge the explanatory power of both genes and environment, and they have shown that genes play an important role in other-regarding preferences and risk-taking (Cesarini, Dawes, Johannesson, Lichtenstein and Wallace 2009), the tendency to cooperate (Cesarini, Dawes, Fowler, Johannesson, Lichtenstein and Wallace 2008), political preferences (Alford, Funk and Hibbing 2005; Hatemi, Medland, Morley, Heath and Martin 2007), voting behavior (Fowler, Baker and Dawes 2008), and even happiness levels (Weiss, Bates and Luciano 2008).
Although twin studies are an important first step in establishing the role of genes for a particular behavior like holding credit card debt, they do not identify the specific genes involved. But the rising availability of DNA analyses now allows us to test hypotheses about targeted genes and their effects. The natural place to start the search for such genes is among those that have already been shown to account for variation in related behaviors. Among these, MAOA is a prime candidate. The MAOA gene encodes monoamine oxidase A, an enzyme that degrades neurotransmitters such as serotonin, dopamine, and epinephrine (adrenaline) in parts of the brain that regulate impulsiveness and cognitive ability (Bertolino, Arciero, Rubino, Latorre, Candia and Mazzola 2005; Hariri, Mattay, Tessitore, Kolachana, Fera and Goldman 2002; Hariri, Drabant, Munoz, Kolachana, Mattay, Egan and Weinberger 2005; Heinz, Braus, Smolka, Wrase, Puls, Hermann and et al. 2005; Meyer-Lindenberg, Buck-holtz, Kolachana, Hariri, Pezawas, Blasi, Wabnitz, Honea, Verchinski, Callicott, Egan, Mattay and Weinberger 2006; Eisenberger, Way, Taylor, Welch and Lieberman 2007). MAOA has been studied for more than twenty years and much is known about the way different versions of this gene regulate transcription, metabolism, and signal transfers between neurons, all of which have behavioral effects (Craig 2007).
In particular, the less transcriptionally efficient alleles of this gene have been associated with a variety of impulsive and addictive behaviors, as well as a lack of conscientiousness (Walderhaug, Lunde, Nordvik, Landro, Refsum and Magnusson 2002; Saito, Lachman, Diaz, Hallikaien, Kauhanen and et al 2002; Ducci, Newman, Funt, Brown, Virkkunen and Goldman 2006; Contini, Marques, Garcia, Hutz and Bau 2006; Passamonti, Fera, Magariello, Cerasa, Gioia, Muglia, Nicoletti, Gallo, Provinciali and Quattrone 2006; Meyer-Lindenberg et al. 2006; Lessem, Hopfer, Haberstick, Timberlake, Ehringer, Smolen and Hewitt 2006; Rosenberg, Templeton, Feigin, Lancet, Beckmann, Selig, Hamer and Skorecki 2006; Guo, Roettger and Cai 2008; Guo, Ou, Roettger and Shih 2008; McDermott, Tingley, Cowden, Frazetto and Johnson 2009). As a result, economists have specifically identified MAOA as a candidate gene for further study (Benjamin, Chabris, Glaeser, Gudnason, Harris, Laibson, Launer and Purcell 2007).
Because credit card debt is a relatively expensive form of debt, our prior intuition is that, all other things being equal, it would be used more by those individuals seeking immediate gratification, displaying less consideration of future consequences, and reduced information processing. Hence, we hypothesize that people with less transcriptionally efficient alleles of the MAOA gene are more likely to accrue credit card debt. Although recent studies have already shown that a large fraction of the variation in economic behavior can be attributed to genetic factors, to date no specific genes have been identified in this process.
Given the novelty of this study, it is crucial to point out at the outset that the goal is to show association rather than causality. Using data from the National Longitudinal Study of Adolescent Health (Add Health), we conduct gene association tests on the relationship between MAOA and credit card debt. The results indicate that the MAOA gene is significantly associated with the reporting of credit card debt. To our knowledge, this is the first article to show a specific gene variant is associated with real world economic behavior.
