Behavioral Economics

This is the fifth column in a series by Bruce Jentleson, Professor at Duke University, and Jay Pelosky, Principal of J2Z Advisory. It originally appeared on the Huffington Post.

The CFPB is the law of the land. The agency was created last year when the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by Congress and signed by the president. This is how laws are made. It says so in the Constitution. A minority of senators can't decide on their own to nullify the law. And tellingly, few are raising the objection that Richard Cordray is unqualified for the post. In fact, he has received glowing and bipartisan support, especially from those he worked when he served as attorney general for Ohio.

The George Washington University School of Business and the Federal Reserve Board host a Financial Literacy Seminar Series  which bring together academics, policy makers, practitioners, and other experts interested in research on financial education and capability building.  Tuesday’s session featured Brigitte Madrian from the Harvard Kennedy School whose research is a cornerstone for our understanding of household saving and investment behavior,

On December 13, 2011 the Asset Building Program hosted Professor Sheldon Garon, author of Beyond Our Means: Why America Spends While the World Saves. While economists often claim people save according to universally rational calculations — saving the most in their middle years as they plan for retirement and saving the least in welfare states — there are substantial differences in savings rates across high income countries. For example, Europeans save at relatively high rates despite generous welfare programs, while Americans save little, despite weaker social safety nets. The assumption that generous social benefits will provide a disincentive to save doesn’t hold up.

On December 13^th, the Asset Building Program is pleased to welcome author and professor Sheldon Garon to speak about his new book, Beyond Our Means: Why America Spends While the World Saves. You can join us in person at 4:00 p.m. on the 13^th or online for the live webcast (registration is not required for the online webcast).

In recent years, researchers and policymakers have offered up young people’s savings policies (e.g., Child Development Accounts [CDAs], the ASPIRE Act) as potential solutions for mitigating the effects of parents’ and households’ financial resources on young people's educational and financial outcomes. One question of interest is whether young people’s financial outcomes can be improved by extending access to basic financial services early in life. In other words, if you give someone a savings account in adolescence, do they maintain that account into young adulthood and beyond?

The Asset Building Program is co-hosting an event Monday, November 7^th with the Pension Rights Center and AARP to discuss concepts put forth in Ellen Schultz’s book Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers. The event will feature the book’s author Ellen Schultz, Phyllis Borzi of the Employee Benefits Security Administration at the Department of Labor, Donald Fuerst from the American Academy of Actuaries, Karen Ferguson from the Pension Rights Center, Michael Calabrese from New America, and David Certner from AARP.

Robert H. Frank spoke at New America last Thursday about the guiding principles of his book, The Darwin Economy, and the policy proposals that stem from his model of economic thought. Reid Cramer started the event off connecting Frank’s ideas to recent trends: tax policy is at the forefront of recent political debates and the Occupy Wall Street movement is focusing attention on rampant economic inequality.

This Thursday October 27, 2011, the Asset Building Program and Economic Growth Program are co-hosting an event featuring the work of Robert Frank, professor of economics at Cornell University and a Distinguished Senior Fellow at Demos. Frank’s book The Darwin Economy seeks to complicate our views on a few of the basic tenets of economic thought: the role of competition in the free market and the theory of the invisible hand.

On November 18, 2011, D2D Fund is hosting the 2011 Prize Linked Savings Conference "More Than Fun and Games" in Boston, MA. Early registration ($150) is available until October 21^st. This one day summit will focus on the various models of prize-linked savings (PLS) that currently exist and bring experts from the academic, entrepreneurial, and policy arenas together to share information and think creatively about new approaches in the field.