Financial Competence
An important branch of research on the quality of financial decision making, including many of the older papers listed below, explores the limits of household financial sophistication, documenting (i) deficiencies in the knowledge and skills necessary for sound financial planning, (ii) the pervasive failure to consult financial experts or use planning tools, (iii) the superficiality of decision processes, and (iv) the prevalence of ostensibly problematic choice patterns.
More recently, my work has attacked these issues through the lens of Behavioral Welfare Economics. My aim has been to develop objective and rigorous methods for determining when financial choices are “bad,” and to measure the associated welfare losses, without imposing someone else’s preferences. These methods facilitate welfare evaluations of various policy interventions such as financial education.
Publications
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Working Paper, March 2021
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Working Paper, May 2021
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Handbook of Behavioral Economics – Foundations and Applications 1, B. Douglas Bernheim, Stefano DellaVigna, and David Laibson (eds), Chapter 5, Elsevier, 2018, pp. 381-516
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National Institute Economic Review, 198, Oct 2006, 75-96
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American Journal of Surgery, 189(2), 2005, 134-139
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Economic Inquiry 41(4), 2003, 531-54
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American Economic Review, 93(1), 2003, 354-365
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Essays on Saving, Bequests, Altruism, and Life-Cycle Planning, Laurence J. Kotlikoff (ed.), MIT Press: Cambridge, 2001, 427-77
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Urology, 57(5), 2001, 866-871
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American Economic Review, 91(4), 2001, 832-857
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American Economic Review Papers and Proceedings, 90(2), 2000, 288-292
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Living with Defined Contribution Pensions, Olivia S. Mitchell and Sylvester J. Schieber (eds.), University of Pennsylvania Press, Pension Research Council, the Wharton School, University of Pennsylvania, 1998, 38-68
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1996 Proceedings of the Eighty-Ninth Annual Conference on Taxation, National Tax Association, Washington, DC, 1997, 28-36
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Facing the Age Wave, David Wise (ed.), Hoover Institution Press: Stanford, CA, 1997, 30-56
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Tax Policy and Economic Growth, Washington, DC: American Council for Capital Formation, 1995, 1-30
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Tax Policy for Economic Growth in the 1990s, Washington, DC: American Council for Capital Formation, 1994, 53-78
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Retirement in the 21st Century: Ready or Not? Employee Benefit Research Institute, 1994, 73-81
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Federal Reserve Bank of Philadelphia Business Review, September/October 1993, 3-20
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New York: Merrill Lynch, Pierce, Fenner & Smith Inc., January 1993, with updates for 1994, 1995, and 1996, and 1997
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Tax Policy and the Economy, 7, 1993, 73-110
Collaborators
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Assistant Professor, University of Zurich
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Director of the Financial Policy Division of the Central Bank of Chile
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Senior Economist, Rand Corporation
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Professor, University of Padua, Italy
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Director of Special Projects, UPenn-Wharton PPI
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Professor, Boston University
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Professor and Provost, University of Wisconsin-Madison
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Professor, Dartmouth College
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Professor, Department of Urological Sciences, University of British Columbia
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Senior Economist, BNP Paribas
Social Security Benefits: An Empirical Study of Expectations and Realizations
I employ data drawn from the Retirement History Survey to study the accuracy of pre-retirement expectations concerning social security benefits. The major findings of this study are as follows. First, survey responses to questions about expected benefits are reasonably noisy. However, when one properly filters out the noise, reported forecasts appear to explain roughly 60% of the variance in realizations. Second, consumers do not form expectations on the basis of all available information.
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