
The (true) legacy of two really existing economic systems
Ariely, D., Garcia-Rada, X., Hornuf, L., & Mann, H. (2014). The (true)…
What drives our decisions to spend, save, or borrow? And how can we redesign systems for better outcomes?
We live in an age of constant temptation to immediately spend more. New technology makes it easier than ever to complete a purchase, and more people are experiencing nontraditional or volatile income. It should therefore come as no surprise that savings and responsible financial decision-making often suffer. We explore the environmental drivers that motivate us to spend, save, earn, or borrow. Such findings can inform the design and enhancement of financial products and services that ultimately benefit us all.
As digital finance becomes more prevalent, our research explores when and how technology and automation increase financial well-being and when they backfire.
How can we get people to responsibly spend on things that make them happy, without feeling guilty? How can we maximize happiness within a given set of financial circumstances? How does wealth drive our perceptions of fairness? What are the impacts of financial stress on other aspects of a person’s life? Does frequently checking your balance reduce or increase anxiety and stress? How does racism or classism contribute to individual time preferences and the wealth gap? We are exploring these questions and more to better understand the relationship between finances, emotions, and society from a psychological perspective.
Americans vastly underestimate the level of inequality in the US, but are in remarkable agreement about wanting a more equal distribution of wealth. In other words, people want a more equal wealth distribution than they think the US has and which is the actual case.
At any given moment, it's hard to know how much discretionary cash we have. Our bank account balance is an easy, but inaccurate, measure. The timing mismatch and fluctuation of income and bills makes understanding your real balance feel like calculus. Our research looks at how we make allocation decisions, particularly as our budgets grow or shrink. We also develop tools and strategies to reduce the cognitive load required to effectively and efficiently track and maintain an ever-changing budget.
Having a rainy day fund for emergencies is critical for those in the emerging world. Avoiding the cycle of debt can quite literally mean the difference between life and death. Our research focuses on strategies to help people in emerging countries build long-term savings.
Debt can be a major liability on the average U.S. household's balance sheet. Our research looks at how people naturally prioritize debt repayment, and use heuristics that contribute to the higher-than-necessary costs of debt, such as anchoring on maximum loan amount but minimum payments, insensitivity to interest rates, and reduced pain of paying with credit. We explore low-touch interventions that mitigate these natural tendencies.
Whether it's saving for an emergency, building a nest-egg for retirement, investing to grow assets for future generations, or charitable giving, it takes considerable self-control to save for the future rather than give in to the spending temptations of today. Our research explores influences and variances of this, as well as concrete methods that increase motivation and commitment for long-term benefits.
How do we determine what something is worth? We look to all sorts of contextual cues and relative information to understand and assess the pricing and valuation of products.
Ariely, D., Garcia-Rada, X., Hornuf, L., & Mann, H. (2014). The (true)…
Although research on loss aversion now spans more than three decades, researchers…
In three field studies, we explore the impact of providing employees and…