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Behavioral Household Finance

Author

Listed:
  • John Beshears
  • James J. Choi
  • David Laibson
  • Brigitte C. Madrian

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.

Suggested Citation

  • John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2018. "Behavioral Household Finance," NBER Working Papers 24854, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24854
    Note: AG PE
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    File URL: http://www.nber.org/papers/w24854.pdf
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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