B. Douglas Bernheim, Distinguished Financial Literacy Speaker
Edward Ames Edmonds Professor of Economics, Stanford University
Edward Ames Edmonds Professor of Economics, Stanford University
Douglas Bernheim is the Edward Ames Edmonds Professor of Economics in the Department of Economics at Stanford University, as well as Department Chair. After completing an A.B. in Economics from Harvard University and a Ph.D. from the Massachusetts Institute of Technology, he joined the Stanford faculty as an Assistant Professor in 1982. He moved to Northwestern University’s J. L. Kellogg Graduate School of Management in 1988, and to Princeton University in 1990, before returning to Stanford in 1994. His awards and honors include election as a fellow of the American Academy of Arts and Sciences, election as a fellow of the Econometric Society, a John Simon Guggenheim Memorial Foundation Fellowship, and an Alfred P. Sloan Foundation Research Fellowship.
Professor Bernheim’s work has spanned a variety of fields, including public economics, behavioral economics, game theory, contract theory, industrial organization, political economy, and financial economics. His notable contributions include the following: in the area of game theory, introducing and exploring the concepts of rationalizability (thereby helping to launch the field of epistemic game theory), coalition-proofness, and collective dynamic consistency (also known as renegotiation-proofness); in the area of incentive theory, introducing and exploring the concepts of common agency and menu auctions, and developing a theory of incomplete contracts; in the area of industrial organization, developing theories of multimarket contact and exclusive dealing; concerning social motives in economics, introducing and exploring the concept of strategic bequest motives, and developing theories of conformity, Veblen effects, and the equal division norm; developing and applying a framework for behavioral welfare economics; developing an economic theory of addictive behaviors; conducting the earliest economic analyses of financial education; and analyzing the conceptual foundations for Ricardian equivalence.
Professor Bernheim is a Research Associate of the National Bureau of Economic Research, a Senior Fellow of the Stanford Institute for Economic Policy Research (SIEPR), and Co-Director of SIEPR’s Tax and Budget Policy Program. He has also served as the Director of the Stanford Institute for Theoretical Economics (SITE), and as Co-Editor of the American Economic Review. He is currently serving as Co-Editor of the Handbook of Behavioral Economics.
We introduce the concept of financial competence, a measure of how closely individuals’ choices align with those they would make if they properly understood their opportunity sets. The concept is firmly rooted in the principles of choice-based behavioral welfare analysis and avoids the types of paternalistic judgments that pervade policy discussions. We document the importance of assessing financial competence by demonstrating experimentally that an educational intervention can appear highly successful according to conventional outcome measures while failing to improve the quality of financial decision making. We trace the mechanisms behind these seemingly divergent findings.
