Low incomes, limited financial literacy, fraud, and deception are just a few of the many intractable economic and social factors that contribute to the financial difficulties that households face today. Addressing these issues directly is difficult and costly. But poor financial outcomes also result from systematic psychological tendencies, including imperfect optimization, biased judgments and preferences, and susceptibility to in?uence by the actions and opinions of others. Some of these psychological tendencies and the problems they cause may be countered by policies and interventions that are both low cost and scalable. We detail the ways that these behavioral factors contribute to consumers' financial mistakes and suggest a set of interventions that the federal government, in its dual roles as regulator and employer, could feasibly test or implement to improve household financial outcomes in a variety of domains: retirement, short-term savings, debt management, the take-up of government benefits, and tax optimization.
Madrian, Brigitte C., Hal E. Hershfield, Abigail B. Sussman, Saurabh Bhargava, Jeremy Burke, Scott A Huettel, Julian Jamison, Eric J. Johnson, John G. Lynch, Stephan Meier, Scott Rick, and Suzanne B. Shu. "Behaviorally Informed Policies for Household Financial Decisionmaking." Behavioral Science & Policy 3.1 (2017): 26-40.