Friday, November 7, 2014: 8:30 AM-10:00 AM
Cochiti (Convention Center)
*Names in bold indicate Presenter
Panel Organizers: Maximilian Schmeiser, Board of Governors of the Federal Reserve System
Panel Chairs: Maximilian Schmeiser, Board of Governors of the Federal Reserve System
Discussants: Carly Urban, Montana State University
The theme running through the papers in this panel is that they all focus on examining the determinants of various positive or negative financial outcomes and then based on their findings developing strategies and policies for improving the financial wellbeing of families. The first paper in the panel examines the effect of three specific states’ high school financial education programs on financial behavior in early adulthood. The paper finds that rigorously constructed and implemented financial education does in fact result in significant improvements in credit behaviors as measured by administrative credit bureau records. This suggests that devoting class time to financial education yields significant returns if it is done properly.
The second paper in the panel examines how mental accounting interacts with considerations of personal responsibility to result in people taking on high interest-rate debt while maintaining savings earning low levels of interest. The paper finds that people’s tendency to preserve savings in favor of borrowing from a high interest-rate credit card varies as a function of the savings’ intended use. Paradoxically, people are most likely to turn to high interest-rate credit under the belief that doing so is the responsible option. Thus efforts to promote savings should be accompanied by strategies that encourage and incentivize appropriate dissaving.
The third paper in the panel examines the relationship between divorce and bankruptcy, trying to determine what aspects of divorce are more likely to lead to subsequent bankruptcy. The paper finds that an inability to independently manage one’s finances frequently leads to the less financially knowledgeable spouse encountering significant financial distress.
The overall purpose of this panel is to present policymakers and practitioners with tangible policies and strategies that they can implement to improve the financial stability and wellbeing of families at various points in the life-course.