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

Sandro Ambuehl, B. Douglas Bernheim and Annamaria Lusardi ()
Authors registered in the RePEc Author Service: Sandro Ambühl

American Economic Review, 2022, vol. 112, issue 11, 3584-3626

Abstract: We examine methods for evaluating interventions designed to improve decision-making quality when people misunderstand the consequences of their choices. In an experiment involving financial education, conventional outcome metrics (financial literacy and directional behavioral responses) imply that two interventions are equally beneficial even though only one reduces the average severity of errors. We trace these failures to violations of the assumptions embedded in the conventional metrics. We propose a simple, intuitive, and broadly applicable outcome metric that properly differentiates between the interventions, and is robustly interpretable as a measure of welfare loss from misunderstanding consequences even when additional biases distort choices.

JEL-codes: D83 D91 G51 G53 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/aer.20210290 (application/pdf)
https://doi.org/10.3886/E171681V1 (text/html)
https://www.aeaweb.org/doi/10.1257/aer.20210290.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/aer.20210290.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Evaluating Deliberative Competence: A Simple Method with an Application to Financial Choice (2021)
Working Paper: Evaluating Deliberative Competence: A Simple Method with an Application to Financial Choice (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:112:y:2022:i:11:p:3584-3626

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/aer.20210290

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().