Lynch studies the psychology of consumer financial decision making, and he has helped create an interdisciplinary field of scholars and policy-makers studying topics like choosing mortgages
Policy makers have embraced financial education as a necessary antidote to the increasing complex... more Policy makers have embraced financial education as a necessary antidote to the increasing complexity of consumers' financial decisions over the last generation. We conduct a meta-analysis of the relationship of financial literacy and of financial education to financial behaviors in 168 papers covering 201 prior studies. We find that interventions to improve financial literacy explain only 0.1% of the variance in financial behaviors studied, with weaker effects in low-income samples. Like other education, financial education decays over time; even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention. Correlational studies that measure financial literacy find stronger associations with financial behaviors. We conduct three empirical studies, and we find that the partial effects of financial literacy diminish dramatically when one controls for psychological traits that have been omitted in prior resea...
Combining prior theory about really new products (RNPs) with temporal construal theory, the autho... more Combining prior theory about really new products (RNPs) with temporal construal theory, the authors show in four field studies that consumers follow through less often on positive purchase intentions to buy RNPs than on intentions to buy incrementally new products (INPs), and the decrement grows over time. Compared with consumers of INPs, consumers of RNPs are less likely to think concretely about the circumstances of buying and using the products and are more poorly calibrated in their expectations of initial product use. The authors discuss implications for both the marketing of and the market research on RNPs.
Many consumers suffer from low levels of financial literacy, and attempts to increase this dimens... more Many consumers suffer from low levels of financial literacy, and attempts to increase this dimension of consumer expertise via educational interventions are typically unsuccessful. We propose that many of these apparent deficits in literacy and learning may be caused by a cognitively efficient distribution of responsibility for knowledge and decision-making in different domains between relationship partners. New relationship partners adopt specialized domains of responsibility quickly and intuitively in a process guided more by circumstantial factors than by matching tasks with aptitudes (study 1). Cross-sectional data from consumers in long-term relationships provide evidence that distributions of responsibility for financial decision-making between partners may give rise to differences in financial literacy, such that the financial specialist develops expertise in this area while the non-specialist does not (study 3). This ever-growing gap in financial literacy is generally unrecognized by consumers (studies 2, 4), despite being linked to corresponding differences in both financial decision-making (studies 5, 6) and financial information search (study 6). Consumers seem to develop expertise on a “need to know” basis. We argue that offloading responsibility to a relationship partner may eliminate this need in the present, while simultaneously creating barriers to developing expertise if and when it is needed in the future.
Decision-makers often do not or cannot predict at the time of choice howtheir tastes may change b... more Decision-makers often do not or cannot predict at the time of choice howtheir tastes may change by the time the outcomes are experienced. This paperexplores the implications of making decisions by maximizing experiencedutility ex post rather than ex ante. Focusing on being satisfied with choicein retrospect results in quite different kinds of problems than aprospective orientation that projects one's current
Policy makers have embraced financial education as a necessary antidote to the increasing complex... more Policy makers have embraced financial education as a necessary antidote to the increasing complexity of consumers' financial decisions over the last generation. We conduct a meta-analysis of the relationship of financial literacy and of financial education to financial behaviors in 168 papers covering 201 prior studies. We find that interventions to improve financial literacy explain only 0.1% of the variance in financial behaviors studied, with weaker effects in low-income samples. Like other education, financial education decays over time; even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention. Correlational studies that measure financial literacy find stronger associations with financial behaviors. We conduct three empirical studies, and we find that the partial effects of financial literacy diminish dramatically when one controls for psychological traits that have been omitted in prior resea...
Combining prior theory about really new products (RNPs) with temporal construal theory, the autho... more Combining prior theory about really new products (RNPs) with temporal construal theory, the authors show in four field studies that consumers follow through less often on positive purchase intentions to buy RNPs than on intentions to buy incrementally new products (INPs), and the decrement grows over time. Compared with consumers of INPs, consumers of RNPs are less likely to think concretely about the circumstances of buying and using the products and are more poorly calibrated in their expectations of initial product use. The authors discuss implications for both the marketing of and the market research on RNPs.
Many consumers suffer from low levels of financial literacy, and attempts to increase this dimens... more Many consumers suffer from low levels of financial literacy, and attempts to increase this dimension of consumer expertise via educational interventions are typically unsuccessful. We propose that many of these apparent deficits in literacy and learning may be caused by a cognitively efficient distribution of responsibility for knowledge and decision-making in different domains between relationship partners. New relationship partners adopt specialized domains of responsibility quickly and intuitively in a process guided more by circumstantial factors than by matching tasks with aptitudes (study 1). Cross-sectional data from consumers in long-term relationships provide evidence that distributions of responsibility for financial decision-making between partners may give rise to differences in financial literacy, such that the financial specialist develops expertise in this area while the non-specialist does not (study 3). This ever-growing gap in financial literacy is generally unrecognized by consumers (studies 2, 4), despite being linked to corresponding differences in both financial decision-making (studies 5, 6) and financial information search (study 6). Consumers seem to develop expertise on a “need to know” basis. We argue that offloading responsibility to a relationship partner may eliminate this need in the present, while simultaneously creating barriers to developing expertise if and when it is needed in the future.
Decision-makers often do not or cannot predict at the time of choice howtheir tastes may change b... more Decision-makers often do not or cannot predict at the time of choice howtheir tastes may change by the time the outcomes are experienced. This paperexplores the implications of making decisions by maximizing experiencedutility ex post rather than ex ante. Focusing on being satisfied with choicein retrospect results in quite different kinds of problems than aprospective orientation that projects one's current
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Papers by John Lynch