Welcome

Hello and thanks for visiting! I am a behavioural economist and data scientist, creating evidence-based  ways of helping people making better decisions. Most of my applied work is in household or consumer finance. Working with some great colleagues in industry, government and academia, I’ve worked on policy and products that help people save time, money and hassle. I have also worked with industry and non-profits on improving financial advice and education.

Below you will find links to my work and academic publications. Do get in touch if you are after a copy of a paper or a dataset for replication. You can find me on LinkedIn and Twitter.

Consumer credit and banking

Impact of retail bank branch closures (with Claudia Robles-Garcia). Financial Conduct Authority, Strategic Review of Retail Banking Business Models, Technical Annex (2018) .
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We investigate the changing coverage of retail bank branch networks in the UK, with a focus on the needs and changing usage patterns of consumers. Our analysis set out to answer three questions: (1) Where are branches opening and closing? (2) Who is affected by branch closures? (3) How does consumer behaviour change after a branch closure?

Time to act: A field experiment on overdraft alerts (with Paul Adams, Michael Grubb, Darragh Kelly and Matthew Osborne). Financial Conduct Authority, Occasional Paper No. 40 (2018).
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Despite the growth of digital banking and the rapidly expanding offering of money management applications, a substantial proportion of banking customers still incur overdraft and unpaid item charges. To the extent that such charges are incurred due to inattention, our previous research shows that automatically enrolling consumers into just-in-time warning alerts can reduce charges. In this paper, we report the findings of a large-scale field experiment with two UK retail banks on automatic enrolment of consumers into just-in-time and early-warning overdraft and unpaid item alerts. In line with our earlier research, we find that that just-in-time  alerts lead to statistically and economically significant reductions in charges. The evidence on the effectiveness on early warning alerts, by contrast, is mixed. A survey with a sub-sample of participants reveals that automatic enrolment into alerts is supported by consumers, even those who opted out of receiving alerts.

Sending out an SMS: The impact of automatically enrolling consumers into overdraft alerts (with Andrea Caflisch, Michael Grubb, Darragh Kelly and Matthew Osborne). Financial Conduct Authority, Occasional Paper No. 36 (2018).
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Incidental charges incurred by UK consumers on their Personal Current Account (PCA) are steep, especially for small amounts of unplanned borrowing and unpaid items. A recent policy mandates major UK banks to send consumers a text message alert of impending charges, allowing them to act before they incur a charge. Using a unique, large and detailed dataset covering the transactions of 1.5 million consumers across 6 banks, and by looking at large-scale automatic enrolment exercises carried out by two major banks, we estimate the effect of automatically enrolling consumers into these alerts. We find that automatic enrolment into alerts has large effects on charges: (i) automatic enrolment into unpaid item alerts (that inform customers of retry periods) reduces charges by 21-24% and (ii) automatic enrolment into unarranged overdraft alerts reduces charges by 25%. We also estimate average treatment effects for different types of consumers, grouped by their pre-alerts level of incidental charges (rare, occasional or heavy), and find that the benefits of automatic enrolment differ markedly between types of consumers. Those who rarely incur charges can avoid as much as half of charges thanks to alerts, whereas heavy users still incur substantial charges after automatic enrolment. We find strikingly similar patterns across the two banks, for both unpaid item and unarranged overdraft charges, providing reassurance that these findings are not specific to a particular customer base or firm implementation.

Financial advice

Effects of the advice requirement and intermediation in the UK mortgage market (with Zanna Iscenko). Financial Conduct Authority, Occasional Paper No. 34 (2018).
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We exploit a change in conduct regulation – the Mortgage Market Review (MMR) in 2014 – to estimate the effects of mandatory advice on the choices of UK mortgage borrowers. Focussing on the most affected segment of borrowers, home purchasers, we find that the proportion of advised transactions increased from three quarters to nearly the entire market post MMR. To estimate the effect on various aspects of consumer choices, we first construct a unique dataset that combines the entire population of residential mortgage originations from mid-2012 to mid-2016 with credit reference agency data and detailed product data on mortgage contracts (including all fees – an important component of costs given frequent re-mortgaging in the UK market). Our observation window straddles the MMR implementation date and our main specifications include an implementation window to reflect the transition in the market. We use difference-in-difference matching on the repeated cross-section to estimate the counterfactual outcome for mortgage borrowers that did not use mortgage advice before the MMR, but were effectively forced to do so afterwards. We find that advice made these borrowers more likely to fix their rates for short periods, choose longer mortgage terms and use an intermediary. We find no effects of mandatory advice on various metrics of borrowing cost. Since we observe a notable increase in intermediation across the market following the MMR, we also use matching on the cross-section of post-MMR originations to estimate the average treatment effect of intermediation. We find that intermediated borrowers are more likely to fix their rates for short periods, choose longer mortgage terms and have a lower cost of borrowing than consumers who go direct to lender.

Financial advisory services (with Ivo Vlaev and Paul Dolan). In: Financial Behavior: Players, Services, Products, and Markets, ed. Baker, H.K., Filbeck, G., and V. Ricciardi (New York: Oxford University Press, 2017).

Financial education and wellbeing

Understanding consumer financial wellbeing through banking data (with Joe Gladstone and Karthik Raghavan). Financial Conduct Authority, Occasional Paper No. 58 (2020).
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In this paper, we investigate the relationship between subjective financial wellbeing, measured by self-reported responses of survey respondents, and objective financial wellbeing, measured by the same respondents’ bank account data. This approach is an example of a ‘matched dataset’, giving regulators and policy bodies a much richer perspective on consumer outcomes. Our objective is to better understand how differences in subjective financial wellbeing, consumers’ lived experience, fluctuates with the objective state of their finances.

Wired for imprudence: Behavioural hurdles to financial capability and challenges to financial education (with Nathalie Spencer, Antony Elliott and Jörg Weber). Report for the Royal Society for the encouragement of Arts, Manufactures and Commerce (2015), London, United Kingdom.
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A growing body of research from the field of behavioural science shows that some of our natural human characteristics undermine financial capability, making it hard to manage money well. This paper explores these ‘behavioural hurdles’, as we call them, and explains why they matter. Cognitive overload, empathy gaps, optimism and overconfidence, instant gratification, harmful habits, and the influence of social norms can all be problematic for financial capability.

Research methods

Using online experiments for behaviourally informed consumer policy. Financial Conduct Authority, Occasional Paper No. 51 (2020).
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TBD

Academic publications

Experimental and self-reported measures of risk taking and digit ratio (2D:4D): evidence from a large, systematic study (with Pablo Brañas-Garza and Matteo M. Galizzi), International Economic Review, Vol. 59 (2018), pp. 1131-1157.
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Using a large (n=704) sample of laboratory subjects, we systematically investigate the links between the digit ratio – a biomarker for pre-natal testosterone exposure – and two measures of individual risk taking: (i) risk preferences over lotteries with real monetary incentives, and (ii) self-reported risk attitude. The digit ratio (also called 2D:4D) is the ratio of the length of the index finger to the length of the ring finger, and we consider both hands’ digit ratios. Previous studies have found that the digit ratio correlates with risk taking in some subject samples, but not others. In our sample, we find that both the right-hand and the left-hand digit ratio are significantly associated with risk preferences: subjects with lower digit ratios tend to choose riskier lotteries. Neither digit ratio, however, is associated with self-reported risk attitude.

How behavioural science can improve financial advice services (with Ivo Vlaev, Steve Martin and Paul Dolan), Journal of Financial Services Marketing, Vol. 20 (2015), pp. 74-88.
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Evidence from the behavioural sciences, notably economics and psychology, has profoundly changed the way policymakers and practitioners view expert advice to consumers. In this article, we take stock of the behavioural science evidence on financial advice and explore its implications for the profession. We organise the evidence in a comprehensive theoretical framework that also serves a practical purpose: the design of behaviour change interventions. We suggest various ways in which financial advisers can use the insights from behavioural science to improve the take-up and effectiveness of their advice. Finally, we discuss ethical and practical considerations for the financial advisor wishing to put behavioural science knowledge to use.

Risk taking and information aggregation in groups (with Spiros Bougheas and Martin Sefton), Journal of Economic Psychology, Vol. 51 (2015), pp. 34-47.
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We report a controlled laboratory experiment examining risk-taking and information aggregation in groups facing a common risk. The experiment allows us to examine how subjects respond to new information, in the form of both privately observed signals and signals reported from others. We find that a considerable number of subjects exhibit ‘reverse confirmation bias’: they place less weight on information from others that agrees with their private signal and more weight on conflicting information. We also find a striking degree of consensus when subjects make decisions on behalf of the group under a random dictatorship procedure. Reverse confirmation bias and the incidence of consensus are considerably reduced when group members can share signals but not communicate.

NB: A previous version appeared as a CeDEx working paper with the same title.

Group member characteristics and risk taking by consensus, Journal of Behavioural and Experimental Economics, Vol. 57 (2015), pp. 81-88.
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I investigate the effect of group members’ individual characteristics on risk taking by groups in an investment experiment. I find that gender is the only of the characteristics that significantly affects risk taking, both for individual investments and group investment decisions by consensus. In individual decisions, women are more risk averse than men. In groups, risk aversion is increasing in the number of female group members. I make out-of-sample predictions of group decisions for different gender compositions based on the sample of individual preferences using simulation of various ‘social decision schemes’. Generally, none of the schemes predicts group decisions well. These results pose new challenges for theories of preference aggregation in groups and have practical implications for organizations that rely on teams to make decisions under risk.

Data and experimental instructions for this paper are freely downloadable as supplementary materials from the publisher’s website.

NB: A previous version appeared as a CeDEx working paper titled Risk taking in diverse groups: Gender matters.

Digit Ratio (2D:4D) and altruism: Evidence from a large, multi-ethnic sample (with Matteo M. Galizzi), Frontiers in Behavioral Neuroscience, Vol. 9:41 (2015).
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We look at the links between the Digit Ratio — the ratio of the length of the index finger to the length of the ring finger — for both right and left hands, and giving in a Dictator Game. Unlike previous studies with exclusively Caucasian subjects, we consider a large, ethnically diverse sample. Our main results are as follows. First, for Caucasian subjects we estimate a significant positive regression coefficient for the right hand digit ratio and a significant negative coefficient for its squared measure. These results replicate the findings of Brañas-Garza et al. (2013), who also observe an inverted U-shaped relationship for Caucasian subjects. Second, we are not able to find any significant association of the right hand digit ratio with giving in the Dictator Game for the other main ethnic groups in our sample, nor in the pooled sample. Third, we find no significant association between giving in the Dictator Game and the left hand digit ratio.

Risk taking in social settings: Group and peer effects (with Spiros Bougheas and Martin Sefton) Journal of Economic Behavior & Organization, Vol. 92 (2013), pp. 273-283.
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We investigate experimentally the effect of consultation (unincentivized advice) on choices under risk in an incentivized investment task. We compare consultation to two benchmark treatments: one with isolated individual choices, and a second with group choice after communication. Our benchmark treatments replicate findings that groups take more risk than individuals in the investment task; content analysis of group discussions reveals that higher risk-taking in groups is positively correlated with mentions of expected value. In our consultation treatments, we find evidence of peer effects: decisions within the peer group are significantly correlated. However, average risk-taking after consultation is not significantly different from isolated individual choices. We also find that risk-taking after consultation is not affected by adding a feedback stage in which subjects see the choices of their consultation peers.

NB: A previous version appeared as a CeDEx working paper with the same title.