OECD Working Papers on Finance, Insurance and Private Pensions
Selected studies on finance, insurance and private pensions policy prepared for dissemination in order to stimulate wider discussion and further analysis and obtain feedback from interested audiences. The studies provide timely analysis and background on industry developments, structural issues, and public policy in the financial sector. Topics include risk management, governance, investments, benefit protection, and financial education. Previous papers addressing these policy issues are available via http://dx.doi.org/10.1787/19936397.
Behavioural economics and financial consumer protection
The G20/OECD Task Force on Financial Consumer Protection has highlighted that “regulators and supervisors can use the insights gained through behavioural economics research to inform their approach to potential remedies to help consumers”.
This paper, prepared under the aegis of the G20/OECD Task Force, first provides some historical context for the development of the field of behavioural economics and its increased application to policy. It then looks more specifically at the application of behavioural economics in the area of financial consumer protection. Common biases that individuals demonstrate in the context of making financial decisions are identified, and an overview of how numerous governments are testing and implementing the application of behavioural economics for policies promoting financial consumer protection is provided. The paper concludes by highlighting the opportunity for behavioural economics to help provide cost-efficient ways of making policy more effective at promoting positive outcomes for consumers, and stressing the need to continue an open dialogue with policy makers, regulators and supervisors to exchange experiences and good practices.
Keywords: financial consumer protection, behevioural economics
D14: Microeconomics / Household Behavior and Family Economics / Household Saving; Personal Finance;
G28: Financial Economics / Financial Institutions and Services / Financial Institutions and Services: Government Policy and Regulation;
D18: Microeconomics / Household Behavior and Family Economics / Consumer Protection