Economics and psychology of life cycle decision making
MOST IMPORTANT ACHIEVEMENT OF THE PROJECT
Perhaps one of the main achievements of the project is that behavioral economics has become part of the mainstream in both education, research and policy. Behavioral economics now features in many Bachelor and Master programs, as well as in post-initial education. Policy makers have become increasingly skeptical toward the recommendation to introduce more choice for consumers and are now familiar with the new policy tools of behavioral economics, such as, defaults, framing effects, commitment devices, and choice architecture.
The three theme conferences we had were definitely among the highlights. Each conference had a nice blend of senior and junior speakers. Among the seniors were Zvi Bodie (Boston University), David Laibson (Harvard University), John List (University of Chicago), and Brigitte Madrian (Harvard university). Attendance was very good, including partner representatives, and the quality of the presentations and discussions was high.
We are particularly proud of the VENI grant Stefan Trautmann received from NWO. It involves an empirical study of prudence and temperance, which measure how much people prepare and forearm themselves in the presence of risk, in contrast to risk aversion, which measures their propensity to avoid all risk. Stefan develops measures for prudence and temperance, studies their impact on economic behaviour, and their variation in the population. Identifying how prudence and temperance correlate with demographic variables helps to identify who is most affected by certain policies. The Netspar paper Higher order risk attitudes, demographics, and financial decisions (DP-04 / 2011 – 117) illustrates Stefan’s line of research in this area. The quality of Stefan’s work is reaffirmed by the Pierson medal he was awarded by the Koninklijke Vereniging voor Staathuishoudkunde (KVS) for being the most promising young researcher in the field of economics and finance.