Buy now, struggle later? Generational differences in BNPL use and household financial behaviors

Purpose Does the use of Buy Now Pay Later (BNPL) improve or worsen the short-term and long-term financial behaviors across generational cohorts in the US? In this study, we examine the effect of these innovative credit services on different financial behaviors. Design/methodology/approach The study uses nationally representative cross-sectional data from the 2022 Survey of Household Economics and Decisionmaking (SHED). To identify relationships, we employ propensity score matching combined with G-computation to estimate the Average Treatment Effect on the Treated (ATT) and entropy balancing as a robustness check. Findings The results indicate that BNPL usage is negatively associated with short-term financial behaviors but it has no statistically significant effect on long-term financial behaviors. These findings remain robust under counterfactual analysis using Average Treatment Effects on the Untreated (ATU) and Entropy balancing, strengthening the internal validity of the results. Originality/value This study is amongst the very few studies that examine the causal effect of Buy Now Pay Later (BNPL) on short- and long-term financial behaviors.