Keywords

behavioral interventions, household finance, financial decision-making

Abstract

Low incomes, limited financial literacy, fraud, and deception are just a few of the many intractable economic and social factors that contribute to the financial difficulties that households face today. Addressing these issues directly is difficult and costly. But poor financial outcomes also result from systematic psychological tendencies, including imperfect optimization, biased judgments and preferences, and susceptibility to influence by the actions and opinions of others. Some of these psychological tendencies and the problems they cause may be countered by policies and interventions that are both low cost and scalable. We detail the ways that these behavioral factors contribute to consumers’ financial mistakes and suggest a set of interventions that the federal government, in its dual roles as regulator and employer, could feasibly test or implement to improve household financial outcomes in a variety of domains: retirement, short-term savings, debt management, the take-up of government benefits, and tax optimization.

Original Publication Citation

“Behaviorally Informed Policies for Household Financial Decision-making.” 2017. Behavioral Science and Policy 3(1): 26-40 (with Hal E. Hershfield, Abigail B. Sussman, Saurabh Bhargava, Jeremy Burke, Scott A. Huettel, Julian Jamison, Eric J. Johnson, John G. Lynch, Stephan Meier, Scott Rick, and Suzanne B. Shu). https://behavioralpolicy.org/wp-content/uploads/2017/01/v3i1-web-full.pdf

Document Type

Peer-Reviewed Article

Publication Date

2017

Publisher

Behavioral Science and Policy

Language

English

College

Marriott School of Business

Department

Finance

University Standing at Time of Publication

Full Professor

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