Evaluating Deliberative Competence: A Simple Method with an Application to Financial Choice

109 Pages Posted: 27 Oct 2014 Last revised: 4 Nov 2022

See all articles by Sandro Ambuehl

Sandro Ambuehl

University of Zurich - Department of Economics

B. Douglas Bernheim

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Annamaria Lusardi

George Washington University - Department of Accountancy; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2014

Abstract

We examine methods for evaluating opportunity-neutral interventions designed to improve the quality of decision making in settings where people imperfectly comprehend consequences. In an experiment involving financial education, conventional outcome metrics (financial literacy and directional changes in behavior) imply that two interventions, one with practice and feedback, one without, are equally beneficial even though only the first reduces average bias. We trace these evaluative failures to violations of implicit assumptions. We propose a simple intuitive outcome metric that properly differentiates between the interventions, and that is robustly interpretable as a measure of welfare loss even when consumers suffer from other biases.

Suggested Citation

Ambuehl, Sandro and Bernheim, B. Douglas and Lusardi, Annamaria, Evaluating Deliberative Competence: A Simple Method with an Application to Financial Choice (October 2014). NBER Working Paper No. w20618, Available at SSRN: https://ssrn.com/abstract=2515196

Sandro Ambuehl (Contact Author)

University of Zurich - Department of Economics ( email )

Z├╝rich
Switzerland

HOME PAGE: http://https://sites.google.com/site/sandroambuehl/home

B. Douglas Bernheim

Stanford University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Annamaria Lusardi

George Washington University - Department of Accountancy ( email )

George Washington University School of Business
Washington, DC 20052
United States

HOME PAGE: http://business.gwu.edu/profiles/annamaria-lusardi/

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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