Behavioral Household Finance

John  Beshears; James J. Choi; David  Laibson; Brigitte C. Madrian

Chapter | Handbook of Behavioral Economics | 2018

Behavioral Household Finance

by John Beshears, James J. Choi, David Laibson and 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.

Keywords: Personal Finance; Global Range; Household; Behavior; Strategy; Governing Rules, Regulations, and Reforms; Product Design; Welfare or Wellbeing;

Format: Print

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Citation:

Beshears, John, James J. Choi, David Laibson, and Brigitte C. Madrian. "Behavioral Household Finance." In Handbook of Behavioral Economics: Foundations and Applications 1, edited by B. Douglas Bernheim, Stefano DellaVigna, and David Laibson, 177–276. Amsterdam: Elsevier, 2018.

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Behavioral Household Finance

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