The effect of access to payday loans on economic well-being is ambiguous from a theoretical perspective. Neoclassical models declare that customers utilize payday advances if they are better than the available alternatives. Such models mean that restricting access would make consumers worse necessarily down. Having said that, behavioral types of pay day loan usage mean that current bias, overoptimism, or other intellectual biases can cause customers to obtain payday advances even if performing this is suboptimal, as judged by their very own choices. If such models accurately describe behavior, restricting use of pay day loans will make customers best off.
The literature that is empirical the hyperlink between access to pay day loans and economic wellbeing involves blended conclusions.