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ABSTRACT US consumers may turn to the private market for credit when income and government benefits fall short. The most vulnerable consumers have access only to the highest-cost loans.

Prior research on trade-offs of credit with government welfare support cannot distinguish between distinct forms of unsecured credit due to data limitations. Here we provide insight on

credit–welfare state trade-offs vis-à-vis unemployment insurance generosity by leveraging a large sample of credit data that allow us to separate credit cards, personal loans and alternative

financial services loans and to analyse heterogeneity in credit use by household income. We find that more generous state unemployment insurance benefits were associated with a lower

probability of high-cost credit use during the first seven quarters of the coronavirus disease 2019 (COVID-19) pandemic. This inverse association was concentrated among consumers living in

low-income households. Our results support theories that public benefits are inversely associated with the use of costly credit. Access through your institution Buy or subscribe This is a

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JOURNEY TOWARDS UNIVERSAL HEALTH COVERAGE Article Open access 21 May 2025 THE POVERTY ALLEVIATION EFFECT OF TRANSFER PAYMENTS: EVIDENCE FROM CHINA Article Open access 05 December 2023

CONSUMPTION RESPONSES TO AN UNCONDITIONAL CHILD ALLOWANCE IN THE UNITED STATES Article Open access 19 February 2024 DATA AVAILABILITY The credit panel data that support the findings of this

study are proprietary data of the Experian Corporation and used under license for the current study and thus are not publicly available. Other scholars can obtain (for a fee) the dataset we

used in this study by contacting Cathy Kelmar at Experian ([email protected]). We draw UI measures from publicly available data from the US Department of Labor Office of

Unemployment Insurance, ‘Significant Provisions of State UI Laws’ collection, effective January 2022 (https://oui.doleta.gov/unemploy/DataDashboard.asp)65. State and ZIP Code control

variables derive from the publicly available 2019 5-year estimates from the ACS (https://www.census.gov/data/developers/data-sets/acs-5year.html)66, the publicly available University of

Kentucky Center for Poverty Research National Welfare Database (https://cpr.uky.edu/resources/national-welfare-data)67, the Bonfer and Koehler Eviction Moratoria and Housing Policy data

(https://www.openicpsr.org/openicpsr/project/157201/version/V2/view)62, and measures created from publicly available National Consumer Law Center Small dollar loan products reports

(https://www.nclc.org/resources/predatory-installment-lending-in-the-states-2021/)63 and Center for Responsible Lending reports

(https://www.responsiblelending.org/sites/default/files/nodes/files/research-publication/crl-red-alert-rates-payday-ratecap-map-jun2023.pdf)64. Benefit level measures for the supplemental

analysis of Supplemental Nutrition Assistance Program come from the University of Kentucky Center for Poverty Research National Welfare Database

(https://cpr.uky.edu/resources/national-welfare-data)67 and the United States Department of Agriculture (https://www.fns.usda.gov/snap/covid-19-emergency-allotments-guidance)68. UI

replacement ratios come from United States Department of Labor data available on the Century Foundation’s website (https://tcf.org/content/data/unemployment-insurance-data-dashboard/)69.

State and ZIP Code datasets including UI measures are available at https://github.com/OSU-UW-CCP/IneqBorrowUICOVID. CODE AVAILABILITY We used Stata MP Version 15 on the Ohio Supercomputer to

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https://tcf.org/content/data/unemploymentinsurance-data-dashboard/ (2023). Download references ACKNOWLEDGEMENTS Support for this study was provided by the Russell Sage Foundation (L.M.B.,

M.B., J.M.C., R.E.D., J.H. and S.M.), the National Institute of Child Health and Human Development (R01HD103356) (L.M.B., R.E.D. and J.H.), National Science Foundation (GR122989) (R.E.D. and

J.H.), The Ohio State University Institute for Population Research through a grant from the Eunice Kennedy Shriver National Institute for Child Health and Human Development of the National

Institutes of Health (P2CHD058484) (M.B., R.E.D. and S.M.), the Institute for Research on Poverty at the University of Wisconsin–Madison through a grant from the US Department of Health and

Human Services, the Office of the Assistant Secretary for Planning and Evaluation (1H79AE000058-01) (L.B. and J.M.C.) and the US Social Security Administration’s Retirement and Disability

Research Consortium, through the University of Wisconsin–Madison Center for Financial Security (RDRC WI20-Q2) (M.B., J.M.C. and S.M.). The funders had no role in study design, data

collection and analysis, decision to publish or preparation of the manuscript. We thank the organizers and audiences of prior presentations of this work at the 2021 Annual Meeting of the

Association for Public Policy Analysis and Management, the 2022 Annual Meeting of the Population Association of America, as well as seminar participants at the West Coast Poverty Center at

the University of Washington. We thank V. Coan for excellent research assistance. The content is solely the responsibility of the authors and does not necessarily represent the official

views or policies of the funders. AUTHOR INFORMATION AUTHORS AND AFFILIATIONS * Sandra Rosenbaum School of Social Work and Institute for Research on Poverty, University of Wisconsin–Madison,

Madison, WI, USA Lawrence M. Berger * Department of Economics, The Ohio State University, Columbus, OH, USA Meta Brown * LaFollette School of Public Affairs, University of

Wisconsin–Madison, Madison, WI, USA J. Michael Collins * Department of Sociology, The Ohio State University, Columbus, OH, USA Rachel E. Dwyer * Department of Sociology, Dartmouth College,

Hanover, NH, USA Jason N. Houle * John Glenn College of Public Affairs, The Ohio State University, Columbus, OH, USA Stephanie Moulton * Department of Organizational Studies, University of

Michigan, Ann Arbor, MI, USA Davon Norris * Institute for Research on Poverty, University of Wisconsin–Madison, Madison, WI, USA Alec P. Rhodes Authors * Lawrence M. Berger View author

publications You can also search for this author inPubMed Google Scholar * Meta Brown View author publications You can also search for this author inPubMed Google Scholar * J. Michael

Collins View author publications You can also search for this author inPubMed Google Scholar * Rachel E. Dwyer View author publications You can also search for this author inPubMed Google

Scholar * Jason N. Houle View author publications You can also search for this author inPubMed Google Scholar * Stephanie Moulton View author publications You can also search for this author

inPubMed Google Scholar * Davon Norris View author publications You can also search for this author inPubMed Google Scholar * Alec P. Rhodes View author publications You can also search for

this author inPubMed Google Scholar CONTRIBUTIONS L.M.B., M.B., J.M.C., R.E.D., J.H. and S.M. designed the research. L.M.B, R.E.D., S.M., D.N. and A.P.R. performed the research. M.B.,

R.E.D., S.M., D.N. and A.P.R. managed the dataset construction. D.N. and A.P.R. analysed data. L.M.B., R.E.D., J.H., S.M., D.N. and A.P.R. wrote the paper. CORRESPONDING AUTHORS

Correspondence to Rachel E. Dwyer or Stephanie Moulton. ETHICS DECLARATIONS COMPETING INTERESTS The authors declare no competing interests. PEER REVIEW PEER REVIEW INFORMATION _Nature Human

Behaviour_ thanks the anonymous reviewers for their contribution to the peer review of this work. Peer reviewer reports are available. ADDITIONAL INFORMATION PUBLISHER’S NOTE Springer Nature

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agreement and applicable law. Reprints and permissions ABOUT THIS ARTICLE CITE THIS ARTICLE Berger, L.M., Brown, M., Collins, J.M. _et al._ Inequality in high-cost borrowing and unemployment

insurance generosity in US states during the COVID-19 pandemic. _Nat Hum Behav_ 8, 1676–1688 (2024). https://doi.org/10.1038/s41562-024-01922-8 Download citation * Received: 31 January 2023

* Accepted: 04 June 2024 * Published: 11 July 2024 * Issue Date: September 2024 * DOI: https://doi.org/10.1038/s41562-024-01922-8 SHARE THIS ARTICLE Anyone you share the following link with

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