Matthew D. Shapiro is the Lawrence R. Klein Collegiate Professor of Economics and Research Professor (Survey Research Center) at the University of Michigan. He is editor of the American Economic Journal: Economic Policy. He is also a Research Associate of the National Bureau of Economic Research. Shapiro received B.A. and M.A. degrees from Yale in 1979 and a Ph.D. from M.I.T. in 1984.
Shapiro’s general area of expertise is macroeconomics. He has carried out research on investment and capital utilization, business-cycle fluctuations, consumption and saving, financial markets, fiscal policy, monetary policy, time-series econometrics, economics of aging, economic measurement, and survey methodology. Among his current research interests are modeling saving, retirement, health, insurance, and portfolio choices of older Americans; using surveys to address questions in macroeconomics and individual decisionmaking; modeling how changes in tax policy affect consumption, investment, employment, and output; improving the quality of national economic statistics; and using naturally-occurring data such as account records and social media to measure and understand economic activity.
During 1993-1994, Shapiro served as Senior Economist at the Council of Economic Advisers with responsibilities for macroeconomic analysis and the weekly economic briefing of the President. He was also a Junior Staff Economist at the Council during 1979-1980. Prior to joining the faculty of the University of Michigan in 1989, Shapiro was an Assistant Professor of Economics at Yale and a member of the Cowles Foundation for Research in Economics. Shapiro was co-editor of the American Economic Review from 1997 to 2000. He was Chair of the Department of Economics, University of Michigan, from 2003 to 2007.
Shapiro is the chair of the Federal Economic Statistics Advisory Committee (FESAC)–the official advisory committee of the Census Bureau, the Bureau of Labor Statistics, and the Bureau of Economic Analysis. He is also a member of the Academic Advisory Panel of the Federal Reserve Bank of Chicago. Shapiro has served as chair of the American Economic Association Committee on Economic Statistics (AEAStat) and as a member of the National Academy of Science’s Committee on National Statistics (CNSTAT) and its Panel on Non-Market Accounts.
Matthew D. Shapiro is married to Susan L. Garetz, M.D., Associate Professor of Otolaryngology/Head and Neck Surgery, University of Michigan Health System. They have two children.
Using comprehensive account records, this paper examines how individuals adjusted spending and saving in response to a temporary drop in income due to the 2013 U.S. government shutdown. The shutdown cut paychecks by 40% for affected employees, which was recovered within 2 weeks. Though the shock was short-lived and completely reversed, spending dropped sharply implying a naïve estimate of the marginal propensity to spend of 0.58. This estimate overstates how consumption responded. While many individuals had low liquidity, they used multiple strategies to smooth consumption including delay of recurring payments such as mortgages and credit card balances.
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.
Arie Kapteyn, Ph.D. is a Professor of Economics and the Executive Director of the Dornsife College of Letters Arts and Sciences Center for Economic and Social Research (CESR) at the University of Southern California. Before founding CESR at USC in 2013, Prof. Kapteyn was a Senior Economist and Director of the Labor & Population division of the RAND Corporation.
Much of Prof. Kapteyn’s recent applied work is in the field of aging and economic decision making, with papers on topics related to retirement, consumption and savings, pensions and Social Security, disability, economic well-being of the elderly, and portfolio choice. He is a pioneer in the development of new methods of data collection, using the Internet and mobile devices.
Dr. Kapteyn received an M.A. in econometrics from Erasmus University Rotterdam, an MA in agricultural economics from Wageningen University, and a Ph.D. from Leiden University, all in the Netherlands.
This paper documents consumers’ difficulty valuing life annuities. We show that the prices at which people are willing to buy annuities are substantially below the prices at which they are willing to sell them, a finding we show is not attributable to an endowment effect. We also find that buy values are negatively correlated with sell values and that the sell-buy valuation spread is negatively correlated with cognition; the spread is larger for those with less education, weaker numerical abilities, and lower levels of financial literacy. Our evidence contributes to the emerging literature on heterogeneity in financial decision-making abilities.
Geng Li is an economist and chief of the Consumer Finance Section at the Federal Reserve Board. In this capacity, Geng oversees and coordinates the research and analysis in areas of student, credit card, and auto loans and the related credit markets. In addition, the Consumer Finance Section is responsible for the G. 19 Consumer Credit statistical release, one of the Primary Economic Indicators. Geng’s research covers financial economics, credit markets, macroeconomics, and household economics in particular. He holds a Ph. D degree from University of Michigan, MA from University of New Mexico, and BA from Nankai University.
This paper presents novel evidence on the role of credit scores in the dynamics of committed relationships. We document substantial positive assortative matching with respect to credit scores, even when controlling for other socioeconomic and demographic characteristics. As a result, individual-level differences in access to credit are largely preserved at the household level. Moreover, we find that the couples’ average level of and the match quality in credit scores, measured at the time of relationship formation, are highly predictive of subsequent separations. This result arises, in part, because initial credit scores and match quality predict subsequent credit usage and financial distress, which in turn are correlated with relationship dissolution. Credit scores and match quality appear predictive of subsequent separations even beyond these credit channels, suggesting that credit scores reveal an individual’s relationship skill and level of commitment. We present ancillary evidence supporting the interpretation of this skill as trustworthiness.
Enrichetta Ravina is Assistant Professor of Finance and Economics at Columbia Business School. Her research interests include Behavioral Finance, Consumption and Credit Markets, Private Wealth Management, and Corporate Finance. Professor Ravina’s current research examines individual portfolio and investment decisions in 401(k) plans, their determinants and the way they are affected by government policy, firm characteristics and individual demographics. Her work also covers the financial decisions of high net worth U.S. households and their interactions with their wealth managers; investors’ preferences and decision making; the consumption, borrowing decisions, credit card usage, and stock market investments of U.S. households; and the effect of appearance, persuasion and personal characteristics on the terms of financial transactions. She received a Ph.D. in Economics from Northwestern University and B.A. in Economics and Business from University of Torino.
We examine the international equity allocations of 3.8 million individuals in 296 401(k) plans over the 2005-2011 period. We find enormous cross-individual variation, ranging from zero to over 75%, and strong cohort effects, with younger cohorts investing more internationally than older ones, and each cohort investing more internationally over time. Access to financial advice, lower fees and more international fund options are associated with higher international allocations, suggesting a role for plan design and policy. Education, financial literacy and the fraction of foreign-born population in the zip code also have positive effects on international diversification, consistent with familiarity and information stories.
Leora Klapper is a Lead Economist in the Finance and Private Sector Research Team of the Development Research Group at the World Bank. Since joining the Bank as a Young Economist in 1998, she has published on entrepreneurship, banking, access to finance, corporate governance, bankruptcy, and risk management. Her current research focuses on consumer finance, digital payments, and measuring financial inclusion (Global Findex). Prior to coming to the Bank she worked at the Board of Governors of the Federal Reserve System, the Bank of Israel, and Salomon Smith Barney. She holds a Ph.D. in Financial Economics from New York University Stern School of Business.
Peter van Oudheusden is a consultant in the Finance and Private Research Team of the Development and Research Group at the World Bank Group. His research interests include public finance and development economics, with the focus on access to finance. He holds a Ph.D. in economics from Tilburg University, The Netherlands.
George Washington University School of Business
Duquès Hall, Room 651
George Washington University School of Business
Duquès Hall, Room 651
George Washington University School of Business
Duquès Hall, Room 651
George Washington University School of Business
Duquès Hall, Room 651
George Washington University School of Business
Duquès Hall, Room 652
George Washington University School of Business
Duquès Hall, Room 652