managing money in tough times (powerpoint) (pdf)...managing money in tough times: policy options for...

31
Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs Federal Reserve Board The analysis and conclusions set forth in this presentation represent the work of the authors and do not indicate concurrence of the Federal Reserve Board, the Federal Reserve Banks, or their staff. Mention or display of a trademark, proprietary product, or firm in the presentation by the authors does not constitute an endorsement or criticism by the Federal Reserve System and does not imply approval to the exclusion of other suitable products or firms.

Upload: others

Post on 04-Jun-2020

7 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Managing Money in Tough Times:

Policy Options for Increasing Financial Security

Jeanne M HogarthConsumer & Community Affairs

Federal Reserve Board

The analysis and conclusions set forth in this presentation represent the work of the authors and do not indicate concurrence of the Federal Reserve Board, the Federal Reserve Banks, or their staff. Mention or display of a trademark, proprietary product, or firm in the presentation by the authors does not constitute an endorsement or criticism by the Federal Reserve System and does not imply approval to the exclusion of other suitable products or firms.

Page 2: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

It was the best of times, it was the worst of timesit was the age of wisdom, it was the age of foolishnessit was the epoch of belief, it was the epoch of incredulityit was the season of Light, it was the season of Darkness. . .

Charles Dickens

Page 3: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Family financial decisions

Page 4: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Family financial decisions

Better use of resources

Page 5: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Family financial decisions

Better use of resources

Increased economic security, better jobs, more home owners

Page 6: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Family financial decisions

Better use of resources

Increased economic security, better jobs, more home owners

More involved in schools, community participation

Page 7: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Family financial decisions

Better use of resources

Increased economic security, better jobs, more home owners

More involved in schools, community participation

Vital, thriving communities, well-educated labor force

Page 8: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

How does policy relate to financial security?

Policy environment establishes access to:EducationDisclosures &

informationSubstantive protectionsRedressProfessional advice

Page 9: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

What do we want families to do?

Invest in themselvesSpend wiselyPlan for their

futureBe happy

Page 10: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Invest in themselves

Page 11: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Invest in themselves

Eat right

Exercise more

Page 12: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Invest in themselves

Spend right Earn more

Page 13: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Invest in themselves & their families

Where do your kids think money comes from?

What kind of money manager are you raising your child to be?

Page 14: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Policy options

Provide opportunities for life-long financial educationSchools (K-12)Colleges & universitiesWork placeCommunity

Financial education as part of pre-natal care

Page 15: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Spend wisely

Page 16: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Spend wisely

Page 17: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Spend wisely

Shop, compare, negotiate

Page 18: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal
Page 19: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal
Page 20: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Spend wiselyUnderstand the real price of

things

Page 21: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal
Page 22: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Policy options

Access to affordable basic financial servicesProtection from high-cost

lending

Page 23: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Plan for their future

Page 24: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Plan for their future

00.5

11.5

22.5

33.5

44.5

55.5

1 2 3 4 5 6 7 8 9 10

dolla

rs

Page 25: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Plan for their future(lessons from behavioral economics)

Endowment effect

Page 26: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Plan for their future(lessons from behavioral economics)

Endowment effectDiscounting

Page 27: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Plan for their future(lessons from behavioral economics)

Endowment effectDiscounting

Page 28: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Plan for their future(lessons from behavioral economics)

Endowment effectDiscountingChoice

architecture

Page 29: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Plan for their future(lessons from behavioral economics)

Endowment effectDiscountingChoice

architectureFraming

Page 30: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Policy options

Individual Development Accounts (IDA’s)Provide a “jump-start” for

building assets“baby bond” programs

Auto-enroll in retirementSelect appropriate default optionConsider automatic increase in

contribution

Page 31: Managing Money in Tough Times (PowerPoint) (pdf)...Managing Money in Tough Times: Policy Options for Increasing Financial Security Jeanne M Hogarth Consumer & Community Affairs. Federal

Be happy

Annual income 20 pounds; annual expenses 19 pounds;

result: happiness.

Annual income 20 pounds; annual expenses 21 pounds;

result: misery.

Charles Dickens