Asking for Help: Survey And Experimental Evidence on Financial Advice And Behavior Change
AbstractWhen do individuals actually improve their financial behavior in response to advice? Using survey data from current defined-contribution plan holders in the RAND American Life Panel (a probability sample of US households), the authors find little evidence of improved DC plan behaviors due to advice, although they cannot rule out problems of reverse causality and selection. To complement the analysis of survey data, they design and implement a hypothetical choice experiment in which ALP respondents are asked to perform a portfolio allocation task, with or without advice. Their results show that unsolicited advice has no effect on investment behavior, in terms of behavioral outcomes. However, individuals who actively solicit advice ultimately improve performance, in spite of negative selection on financial ability. One interesting implication for policymakers is that expanding access to advice can have positive effects (particularly for the less financially literate); however, more extensive compulsory programs of financial counseling may be ultimately ineffective.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by RAND Corporation Publications Department in its series Working Papers with number 714-1.
Length: 47 pages
Date of creation: Jan 2010
Date of revision:
Contact details of provider:
Postal: 1776 Main Street, P.O. Box 2138, Santa Monica, California 90407-2138
Web page: http://www.rand.org/pubs/
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-30 (All new papers)
- NEP-CBE-2010-01-30 (Cognitive & Behavioural Economics)
- NEP-EXP-2010-01-30 (Experimental Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Julie Agnew & Joshua Hurwitz, 2013. "Financial Education and Choice in State Public Pension Systems," NBER Working Papers 18907, National Bureau of Economic Research, Inc.
- Taylor, Mark P. & Jenkins, Stephen P. & Sacker, Amanda, 2011. "Financial capability and psychological health," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 710-723.
- repec:ese:iserwp:2011-18 is not listed on IDEAS
- Johansen, Kathrin, 2010. "Multiple information search and employee participation in occupational pension plans," Thuenen-Series of Applied Economic Theory 114, University of Rostock, Institute of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benson Wong).
If references are entirely missing, you can add them using this form.