More and more people struggle with debt, and while people differ in their motivations, preferences, and their reasons not to pay, debt collection practices rarely take these factors into account. Using psychological insights, debt collection can be made more debtor-friendly and effective. The results: increased repayments for companies and a lower financial burden for consumers.
We’re generally poor at predicting how events will impact future states of happiness. And yet, if we’re going to make good decisions in the present, we need to empathize with our future selves at some level. How can we reconcile this? The answer may lie with art, visualization, and social cognition.
There have never been more options to choose from when paying. Under conventional Economics assumptions, this should not make a difference in either decision-making or outcomes. According to behavioral economics, however, the payment method chosen does impact (financial) decision-making and its possible outcomes. In this article we dive into the impact a payment method can have on financial decision-making.
The research literature on nudge effectiveness is growing. 2022 started with a new PNAS article reporting a meta analysis of 455 effect sizes from 214 publications. Here's a short summary.
Mutual funds cannot consistently return better-than-average performance. Yet investors often pick their mutual funds based on past performance. Researchers Leonardo Weiss-Cohen, Philip Newall and Peter Ayton conducted a long-term Think Forward Initiative research project that sought to answer how their investment decisions could be improved.
It is no secret that too few households save for a rainy day and this financial planning problem is a difficult habit to break. Would knowing your neighbours’ savings balance encourage you to save more?
Nudges are great, but they aren’t enough. While they are elegant, nudges are (often) just tweaks augmenting a pre-existing service or policy regardless of its quality, appropriateness or fitness. It is time to go from nudging to behavioral design.
