Journal of Marketing Research Releases RSF-Funded Issue on Consumer Finance

New York—The Journal of Marketing Research released a special issue in November that provides new insights on how to improve consumers' financial decisions. The issue, funded by the Russell Sage and Alfred P. Sloan Foundations, features 14 articles by leading scholars from a range of disciplines, including finance, psychology, marketing and behavioral science.

RSF and Consumer Finance
• Online Forum: Ideas for the Consumer Finance Protection Bureau
• Behavioral Economics and Consumer Finance Working Group
• Featured RSF Author: Sendhil Mullainathan
• RSF Book: Do Emotions Help or Hurt Decision Making?

"There are so many academic disciplines that have something to say about consumer financial decision making," said John G. Lynch Jr., the issue’s editor-in-chief. "The objective here was to ask all these people from different fields to be a part of the conversation."

In the wake of the financial crisis, many have expressed concerns about the delivery of consumer financial services and the structure of current regulations. Recent research has also provided abundant evidence of systemic errors in the ways consumers handle their finances.

"Consumers are often poorly informed and susceptible to making serious errors that have great personal and societal consequences," Lynch writes in the issue’s introduction.

The issue analyzes how consumers make core financial decisions, from retirement planning and spending choices to investing in the stock market. Many of the articles also investigate interventions that may help consumers reach their financial goals.

SNAPSHOT OF ARTICLES
• Craig McKenzie and Michael Liersch examine if people save less because they do not fully recognize the power of compound interest. In a series of experiments, they find that showing estimated future 401(k) balances and an illustration of savings growth over 40 years may motivate people to save more.
• Lisa Bolton, Paul Bloom and Joel Cohen study the best way to protect consumers who receive “debt relief” marketing from for-profit firms. They argue consumers should be taught both how particular loans work and how lenders seek to make money.
• Abigail B. Sussman and Christopher Y. Olivola investigate how differences in taxes affect consumer choices. They find that people are more willing to travel to a store to avoid taxes than for a sale with greater nontax savings. This dislike of taxes may explain why people in low marginal tax brackets over-consume tax-exempt municipal bonds.
• Janet Schwartz, Mary Frances Luce and Dan Ariely examine the role of expert advisers in the context of health care spending. They find that patients who trust their health care provider are more reluctant to solicit a second opinion. This reluctance increases the cost of health care without improving its quality by making consumers more likely to accept the expert’s advice to use a more costly procedure.

The issue can be downloaded from the American Marketing Association's website.

The issue was funded as part of the Russell Sage Foundation’s effort to explore new lines of behavioral economic research on consumer decision making in order to improve the design of regulatory strategies in retail financial markets. Several members of the Foundation’s consumer finance working group and Behavioral Economics Roundtable helped edit the special issue, including Shlomo Benartzi, George Loewenstein, Dan Ariely, Eric Johnson, John Payne, Stefano DellaVigna, Brigette Madrian, Eldar Shafir, Suzanne Shu and Jon Zinman.

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The Russell Sage Foundation is the principal American foundation devoted exclusively to research in the social sciences. Located in New York City, it is a research center, a funding source for studies by scholars at other academic and research institutions, and an active member of the nation’s social science community. The Foundation also publishes, under its own imprint, the books that derive from the work of its grantees and Visiting Scholars. It is best known for its support for research programs on low-wage work, social inequality, immigration, and behavioral economics.

For further information on this or any other Russell Sage Foundation publications, or to schedule an interview with the authors, please contact David Haproff at 212-750-6037.

Visit us on the web at: www.russellsage.org