Quicksand or Bedrock for Behavioral Economics? Assessing Foundational Empirical Questions
62 Pages Posted: 13 Jun 2018
Date Written: April 1, 2018
Behavioral economics lacks empirical evidence on some foundational questions. We adapt standard elicitation methods to measure multiple behavioral factors per person in a representative U.S. sample, along with financial condition, cognitive skills, financial literacy, classical preferences, and demographics. Individually, behavioral factors are prevalent, distinct from other decision inputs, and correlate negatively with financial outcomes in richly-conditioned regressions. Conditioning further on other B-factors does not change the results, validating common practice of modeling B-factors separately. Corrections for low task/survey effort modestly strengthen the results. Our findings provide bedrock empirical foundations for behavioral economics, and offer methodological guidance for research designs.
Keywords: behavioral economics, financial well-being, b-factors, empirical evidence
JEL Classification: D03, D14, D6, D8, D9, E03, G02
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