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on Financial Literacy and Education |
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Issue of 2018‒08‒13
three papers chosen by |
| By: | B. Douglas Bernheim; Dmitry Taubinsky |
| Abstract: | This chapter surveys work in behavioral public economics, emphasizing the normative implications of non-standard decision making for the design of welfare-improving and/or optimal policies. We highlight combinations of theoretical and empirical approaches that together can produce robust qualitative and quantitative prescriptions for optimal policy under a range of assumptions concerning consumer behavior. The chapter proceeds in four parts. First, we discuss the foundations and methods of behavioral welfare economics, focusing on choice-oriented approaches and the measurement of self-reported well-being. Second, we examine commodity taxes and related policies: we summarize research on optimal corrective taxes, the efficiency costs of sales taxes that are not fully salient, the distributional effects of sin taxes, the use of non-price policies such as nudges, the tax treatment of giving, and luxury taxes. Third, we examine policies affecting saving, including capital income taxation, commitment opportunities, default contribution provisions for pension plans, financial education, and mandatory saving programs. Fourth, we detail the manner in which under-provision of labor supply and misunderstandings of policy instruments impact optimal labor income taxation and social insurance. We close with some recommendations for future work in behavioral public economics. |
| JEL: | H0 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24828&r=fle |
| By: | Taylor, Erin (Canela Consulting) |
| Abstract: | Consumer finance practices globally are undergoing a transformation due to the increased mobility of people and the technologization of finance. This increasing mobility has the potential to deliver both positive and negative effects for consumers. On the one hand, it can expand consumer choice, increase access to product information, assist with financial literacy, and improve security. On the other hand, it may increase certain social and economic issues, such as fraud, user errors, learning difficulties, stress, and financial mismanagement. This paper discusses a range of issues that increased mobility finance presents for consumers in the areas of product mobility, human mobility, and information mobility. |
| Date: | 2017–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfcw:2017-03&r=fle |
| By: | Sara G. Castellanos; Diego Jiménez Hernández; Aprajit Mahajan; Enrique Seira |
| Abstract: | This paper provides evidence on the difficulty of expanding access to credit through large institutions. We use detailed observational data and a large-scale countrywide experiment to examine a large bank's experience with a credit card that accounted for approximately 15% of all first-time formal sector borrowing in Mexico in 2010. Borrowers have limited credit histories and high exit-risk – a third of all study cards are defaulted on or canceled during the 26 month sample period. We use a large-scale randomized experiment on a representative sample of the bank's marginal borrowers to test whether contract terms affect default. We find that large experimental changes in interest rates and minimum payments do little to mitigate default risk. We also use detailed data on purchases and payments to construct a measure of bank revenue per card and find it is generally low and difficult to predict (using machine learning methods), perhaps explaining the bank's eventual discontinuation of the product. Finally, we show that borrowers generating a favorable credit history are much more likely to switch banks providing suggestive evidence of a lending externality. Taken together these facts highlight the difficulty of increasing financial access using large formal sector financial organizations. |
| JEL: | D14 D18 D82 G20 G21 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24849&r=fle |