Behavioral Economics

We are excited to be hosting an event this Thursday with a terrific panel of experts on retirement savings. The panel will discuss the retirement income deficit, low rates of participation in retirement savings plans, and possible ways to facilitate automatic savings through workplace retirement plans. 

Mark your calendars! Suffolk University’s Law School and the National Consumer Law Center are convening a Research Symposium on Credit Scoring and Credit Reporting in Boston, MA on June 6-7, 2012. The symposium will be invite-only and authors are invited to submit papers for consideration until November 15, 2011. See the attached pdf on the right under "Related Files" for more details about the submission process, possible topics, and formatting.

The Federal Reserve Bank of Dallas dedicated an issue of its series “Banking and Community Perspectives” earlier this year to the issue of asset building in a rural context. “Asset Building Taking Root in Rural Communities” provides a thorough overview of the unique challenges of building wealth and economic security in rural areas and features promising regional initiatives that seek to do just that. To date, policymakers, non-profits, and the private sector have collaborated on diverse approaches to asset building in the area from IDAs in New Mexico and Louisiana to community tax centers and financial literacy efforts in Texas.

In putting forth his jobs program, President Obama faced a difficult dilemma: propose a program that could gain Republican support or a more ambitious program that would actually get the economy back on a path of recovery and job creation.

In today's Huffington Post, Bruce Jentleson, a policy wonk, and Jay Pelosky, a seasoned global investor, argue that the public and private sectors in the United States must cooperate if the country is to "revitalize domestically and compete globally."

The First FDIC-Insured Bank Designed just for Young People Turns 24 Years Old

The research on young people’s savings points to early access to basic financial services to improve young people’s life outcomes, including things like improved financial and educational outcomes. Just to give a few examples, research by William Elliott and colleagues finds that young people who have their own savings accounts are significantly more likely to attend and graduate from college. Some of my own research finds that young people are significantly more likely to continue saving later in life when they have access to savings accounts early in life. Given the apparent importance of young people’s savings for improving their life outcomes, financial institutions have a role to play in including young people in basic financial services.

On July 15, 2011, Reid Cramer, Director of the Asset Building Program, presented the keynote address to the Advancing Workplace Savings Initiatives conference at the Federal Reserve Bank of Richmond emphasizing the need to provide automatic savings opportunities to more Americans and presenting the most recent learnings and policy implication from the AutoSave pilot.

In her presentation to the Conference on Savings Strategies & Innovations for Low-Income Households at the Federal Reserve Bank of Cleveland on December 12, 2010, Caroline Schultz of MDRC provides some preliminary findings from the AutoSave pilot. To access the presentation, click here or on the PDF file to the right.

Last Friday, New York Times columnist David Brooks had a great piece summarizing some recent research on the psychology of poverty by Harvard’s Sendhil Mullainathan and Princeton’s Eldar Shafir.

This paper argues that common definitions of financial capability understate the role of psychological barriers to establishing sound financial behaviors, namely savings habits. Drawing on insights from psychology and behavioral economics, we explore these missing psychological variables in the standard financial capability equation and suggest mechanisms, or nudges, to overcome those barriers to accelerate financial capability among low-income youth.