Behavior, Paternalism, and Policy: Evaluating Consumer Financial Protection

45 Pages Posted: 7 Jun 2018

See all articles by Adam Christopher Smith

Adam Christopher Smith

Johnson & Wales University

Todd Zywicki

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: 03/11/2014

Abstract

This paper examines the relationship between behavioral law and economics (BLE) as a policy prescription platform and its influence on the regulations emerging from the Consumer Financial Protection Bureau (CFPB). We show how these regulations are inconsistent with the intent and purpose of improving consumer choices. We further demonstrate that the selective modeling of behavioral bias in the BLE framework causes an overestimation of the ability of regulators, who in actuality use inefficient, heavy-handed rules based on little if any real empirical findings of "consumer irrationality." Accordingly, the broader lesson on the misapplication of behavioral economics goes beyond the ill-considered policies emerging from the CFPB.

Suggested Citation

Smith, Adam Christopher and Zywicki, Todd, Behavior, Paternalism, and Policy: Evaluating Consumer Financial Protection (03/11/2014). MERCATUS WORKING PAPER. Available at SSRN: https://ssrn.com/abstract=3191298 or http://dx.doi.org/10.2139/ssrn.3191298

Adam Christopher Smith (Contact Author)

Johnson & Wales University ( email )

8 Abbott Park Pl.
Providence, RI 02903
United States

HOME PAGE: http://adamc-smith.com/index.html

Todd Zywicki

affiliation not provided to SSRN

No Address Available

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