Keywords

household finance behavior, behavioral economics, financial interventions

Abstract

This chapter provides an overview of household finance. The first part summarizes key facts regarding household financial behavior, emphasizing empirical regularities that are inconsistent with the standard classical economic model and discussing extensions of the classical model and explanations grounded in behavioral economics that can account for the observed patterns. This part covers five topics: consumption and savings, borrowing, payments, asset allocation, and insurance. The second part addresses interventions that firms, governments, and other parties deploy to shape household financial outcomes: education and information, peer effects and social influence, product design, advice and disclosure, choice architecture, and interventions that directly target prices or quantities.

Original Publication Citation

“Behavioral Household Finance.” In Douglas Bernheim, Stefano Della Vigna and David Laibson, editors, Handbook of Behavioral Economics, Amsterdam: Elsevier-North Holland, pp. 177-276 (with John Beshears, James J. Choi and David Laibson).

Document Type

Peer-Reviewed Article

Publication Date

2018

Publisher

Handbook of Behavioral Economics

Language

English

College

Marriott School of Business

Department

Finance

University Standing at Time of Publication

Full Professor

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