- RT @LSEBehavioural: Behavioural economics works for saving energy – my family's XCel Energy bill in Minnesota – fun! http://t.co/GnewsX3p0Q ->
- Using windscreen wipers on cars to measure rainfall and predict floods. Cool #technology http://t.co/PqOPtSWPZf ->
- RT @AXAResearchFund: Hail hail! #axarf 2014 #postdocs: candidates can submit their light proposals till Jan 9 http://t.co/u496LHbKhq ->
- Is Risk Management Obsolete? Nice piece about risk in business http://t.co/mJrsmNvQFk ->
- New blog post: Meanwhile, on Twitter (week 50) http://t.co/ou65qg02mA ->
- PayPal president does not think Bitcoin is a currency, and predicts queues will soon be a thing of the past http://t.co/IMIcGnqLNA ->
- New blog post: Rationality quote of the day http://t.co/pSZE7BZWPf ->
- Democracy fosters trust http://t.co/9ykTJmDzxM ->
- Cheating is more common with medium than with intense or low competition… very neat experiment http://t.co/C1YNlY0WUW ->
- RT @meenakandasamy: Supreme Court of India's Guide to Sex: Premarital sex = marriage. Homosexuality = illegal. Marital rape = sex. ->
- Nice piece on altmetrics and education research http://t.co/4v02viJMRS ->
- I would donate so much more to charity (e.g. Wikipedia) if I could use my Amazon account. Credit/debit card too much of a barrier.. ->
- "In an advertisement (…) girls trade tiaras for hard hats" Engineering Toys for Girls http://t.co/VmRjapJ7tD ->
Here’s what happened to a young sheep dog, who was so eager to herd sheep that he drove the whole flock over a cliff:
[the sheep dog] had done his work so thoroughly that he was considered too good a workman to live, and was, in fact, taken and tragically shot at twelve o’clock that same day—another instance of the untoward fate which so often attends dogs and other philosophers who follow out a train of reasoning to its logical conclusion, and attempt perfectly consistent conduct in a world made up so largely of compromise
(From Hardy’s Far from the Madding Crowd. )
- Great seminar and good dinner chat last night in Cambridge – Thank you @JoeJGladstone for the invite! ->
- Festive season fact: stollen bread was only allowed to contain butter after special exemption from the pope http://t.co/RUPbQc1g3s ->
- Daniel Sgroi advocates a Bayesian approach to research quality ranking: http://t.co/nE49nn5PeL ->
- 100+ followers in less than 3 weeks for our @LSEBehavioural Twitter account! ->
- Scientific evidence for Murphy's Law: just as I'm trying to submit a paper, campus WiFi slows down to a crawl… ->
- "Our clients are people who have diamonds, watches, Picassos and Warhols, but might be a little short on cash." http://t.co/eEUrktYAxU ->
- Well done @laura_kudrna and 'a fellow researcher'! http://t.co/uDQjt3GxJt ->
- RT @lsebehavioural: Our own @laura_kudrna found that the elderly report being less tired than teens in ATUS data: http://t.co/c6Ul3jVX6J ->
- RT @GregBDavies: The only function of economic forecasting is to make astrology look respectable.
John Kenneth Galbraith ->
- Shifting Sources of Artist Income: 1999-2012…http://t.co/LxwuMwPwuN ->
From Gneezy (2005):
…people care not only how much they gain from a lie, but also how much the other side loses. (…) The implications of these results are illustrated by the purchase of a car: you can trust what the seller says about the condition of the brakes more than what she says about the state of the air conditioning.
- RT @GregBDavies: New Executive MSc Behavioural Science at LSE. http://t.co/vFARuSEDWq Thanks Greg! ->
- Nice article on will-power with the best title I've seen in a while: "Blame it on the brain" http://t.co/DkGU5AAwjn ->
- Evidence that market experience does not make you less myopically loss averse http://t.co/KjcveFGUlE ->
- New blog post: Meanwhile, on Twitter (week 46) http://t.co/RLLot0GbqS ->
- Inequality becoming a research priority: read about the newly launched Washington Center for Equitable Growth http://t.co/zkTl9tErS6 ->
- New blog post: Financial knowledge, not all it's cracked up to be? http://t.co/0klw9cmvUp ->
- RT @LSEBehavioural: Nudges for animals or more than calories needed in a nudge? http://t.co/oaN5IZIxFV via @laura_kudrna ->
- RT @mc_hankins Frequency of p-values <= 0.1 on Google Scholar (N=14,530,170) http://t.co/jBt9Erc7BA ->
- RT @LSEBehavioural: People report lower life satisfaction after switching to summer time: http://t.co/rYMKDRfcxt #happiness ->
- So people give more generous tips during the holiday season http://t.co/BIKWbiRjnZ ->
- This sounds like an interesting talk: "How nurture alters nature" http://t.co/oY66Dejnyf ->
- RT @LSEBehavioural: Last night we kicked off our behavioural econ seminars w/ George Loewenstein. Full schedule: http://t.co/OZtQrZp6MD ->
The stats are clear: a lot of people don’t know much about financial matters. A recent report by the UK’s Money Advice Service found that 16% of people could not identify the balance on a bank statement, and 35% of people incorrectly thought that 5% inflation did not diminish the purchasing power of a savings account with 3% interest rate.
I can think of plenty of reasons to be worried about these figures. But do they matter for immediate economic decisions and outcomes? Perhaps people can manage their finances without looking up their balance on statements, and knowledge of real interest rates is arguably not required unless we’re in times of persistent negative real interest rates (let’s hope that’s not the case right now). Perhaps people will adapt when required – experienced inflation surely hurts a lot more than imagined inflation.
The more general question is: does poor financial knowledge cause poor financial health? A thought-provoking recent paper by Schmeiser and Seligman in the Journal of Consumer Affairs (JOCA – you would publish there just for the acronym) suggests that correctly answering financial knowledge questions “has little significant relationship to changes in wealth over time.” Shocking stuff.
Now, Schmeiser and Seligman only look at changes in non-housing wealth over a short period of time (2002-2008). When they look at total wealth, they do find a positive effect of knowledge. But individual bits of knowledge add little explanatory power – they all seem to measure roughly the same thing.
Which reminds me of several studies that find that mathematical ability, not financial knowledge per se, is strongly correlated with financial health (see here). And a recent meta-analysis by Fernandes, Lynch and Netemeyer that reports that the measured effect of financial education pretty much disappears once psychological factors are taken into account.
Does all of this mean that educating people about financial matters is not worth it? I don’t think so. I think it means that we know very little about the long-term usefulness of possessing particular bits of financial knowledge, and that the “training course” approach to improving financial knowledge is still scientifically unproven. But I’m cautiously optimistic that the “Test, learn, adapt” approach will start filling in some blanks in the next few years.
- Would this really work? Intriguing: Being Considerate Of Your Future Self http://t.co/8QPQyVTRsz ->
- The Behavioural Insights Team is recruiting! Check here: http://t.co/SLl6xKTffZ ->
- Finally attended my first seminar at LSE – George Loewenstein on sex, children & happiness. ->
- The role of interviewer encounters in panel responses on life satisfaction http://t.co/pBIXXeakFf ->
- A field experiment on savings… at a homeless shelter http://t.co/c72NrLD4xN ->
- Grad school Barbie, very funny! http://t.co/B6BQerQR1E via @flaviasavila ->
- Can't remember the last time I started Itunes WITHOUT a 'new version for download' pop-up! ->
- New blog post: Meanwhile, on Twitter (week 44) http://t.co/IoNwdzMIrc ->