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The aim of this workshop was to provide a deeper understanding of, and to propose solutions to, consumer confusion in financial decision making.
Recent public inquiries have exposed the high personal and societal costs of mis-selling of financial services. Clearer, confident financial choices can improve financial well-being, reducing mis-selling and its consequences. Covering topics that range from retirement savings and investments, consumer credit, and residential mortgages, this workshop addressed urgent and far-reaching issues.
The workshop synthesized the available evidence from different disciplines. It explored ways to empower consumers to make confident financial decisions, to protect themselves against mis-selling, increase efficiency, and rebuild trust in the financial services industry.
Workshop co-chairs:
Professor Hazel Bateman, CEPAR Deputy Director, UNSW Sydney
A/Professor Christine Eckert, CEPAR Associate Investigator, University of Technology Sydney
Professor Susan Thorp, CEPAR Associate Investigator, The University of Sydney
PROGRAM Day 1: 5 September 2019 |
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09:50 – 10:00 |
Welcome Address and Opening Remarks John Piggott, CEPAR Director, UNSW Sydney |
10:00 – 12:00 |
THEME 1: The Underpinnings of Learning and Confusion Chair – Christine Eckert (University of Technology Sydney) Presenters – Uwe Dulleck (Queensland University of Technology), Ben Newell (UNSW) This theme explored the psychological basis of consumer learning about their own needs, the products available in the market and the fit between the products and their needs. Experts from economics and psychology provided insights into the way consumers search for and process information. They discussed different cognitive biases that consumers’ experience and heuristics they rely on. (Learning and) Confusion in Financial Decisions - A perspective and some relevant research of a behavioural economist - Uwe Dulleck (Queensland University of Technology) Uwe Dulleck obtained his PhD at Humboldt University Berlin in 1999. Before Uwe joined QUT he was a Professor of Economics at the University of Linz, Austria and an Assistant Professor at the University of Vienna. His publications can be found in the ‘American Economic Review’, ‘Journal of Economic Literature’, the ‘Economic Journal’, the ‘Journal of Public Economics’, the ‘International Journal of Industrial Organization’, the ‘Scandinavian Journal of Economics’, among others. His research has been discussed in the Economic Focus of ‘The Economist’, the Sydney Morning Heralkd and the ‘Frankfurter Allgemeine Sonntagszeitung’ (the Sunday edition of Germany’s leading quality newspaper), among others. Uwe was awarded several ARC Linkage Grants and one ARC Discovery Grant. He is a co-investigator of two Austrian Research grants. In total his research funding exceeds AUD 2,500,000). In 2015 Uwe was the Chairman of the Programm Committee for Australia’s Conference of Economists, the leading and largest conference for research and applied economists in Australia. He is an active public speaker on Behavioural Economics and its applications to Public Policy, Business Decision Making and Regulation. Projected Confusion: Simple heuristics in financial future-thinking - Ben Newell (UNSW) Ben Newell is Professor of Cognitive Psychology and Deputy Head of the School of Psychology at UNSW Sydney, and an Associate Investigator at CEPAR. His research focuses on the cognitive processes underlying judgment, choice and decision-making and the application of this knowledge to environmental, medical, financial and forensic contexts. He has published over 100 journal articles and book chapters and is the primary author of the leading text, Straight Choices: The Psychology of Decision Making. Ben has worked with industry and government partners on projects including climate change communication, retirement wealth-planning and child protection. Ben is a member of the Academic Advisory Panel of the Behavioural Economics Team of the Australian Government. |
13:00 – 15:00 |
THEME 2: Market and Consumer Factors that Contribute to Confusion in Financial Decision Making Chair – Susan Thorp (University of Sydney) Presenters - Paul Gerrans (University of Western Australia), Xavier O'Halloran (Super Consumers Australia) The purpose of this theme was to explore both market as well as consumer related factors that contribute to confusion in financial decision making. Concepts such as information overload and product complexity were discussed along with consumer factors relating to (financial) literacy. Understanding and overcoming confusion in consumer financial decision making - Paul Gerrans (University of Western Australia) Paul Gerrans is a Professor of Finance at The University of Western Australia. Paul’s research focuses on consumer financial decision making, particularly within a retirement savings context, and the role of financial literacy in these decisions. This research has been aided by transaction databases provided by a number of large retirement savings funds. Paul teaches personal finance and financial planning and undertakes related research into financial literacy and financial advice seeking. He has an interest in all aspects of financial literacy with an emphasis on the acquisition of financial literacy by young adults (e.g. undergraduate students) and the interaction of financial literacy and cognitive decline among older adults. Paul has previously been a member of federal government retirement savings advisory bodies, a member of the MoneySmart Teaching Evaluation Steering Committee at the Australian Securities and Investments Commission, and presently is a member of the OECD/INFE Research Committee. Understanding and overcoming low engagement among superannuation consumers - Xavier O'Halloran (Super Consumers Australia) Xavier O'Halloran is the Acting Director of Super Consumers Australia. Xavier works primarily advocating on behalf of low and middle income people on consumer finance issues, including superannuation, and group life insurance. Previously he worked at the Australian Communications Consumer Action Network (ACCAN) as a Policy Officer working on telecommunications consumer protection and competition policy. He led the team responding to the Financial Services Royal Commission at CHOICE and has represented consumers on several advisory bodies. Including the Australian Securities and Investments Commission (ASIC) Consumer Advisory Panel. He also developed a ‘chat bot’ to help younger people engage with their super. |
15:30 – 17:30 |
THEME 3: Models to Measure Confusion and its Impact on Consumer Decision Making Chair – Fedor Iskhakov (Australian National University) Presenters – Mike Keane (UNSW), Mikhail Anufriev (University of Technology Sydney) Theme 3 provided an overview of existing econometric and behavioural models that aim to measure confusion and its impact on consumer financial decision making. The theme discussed limitations to current modeling approaches and explored possible ways to incorporate findings from themes 1 and 2 into these models. Evaluating Consumers' Choices of Medicare Part D Plans - Mike Keane (UNSW) Mike Keane is an Australian Laureate Fellow and Professor of Economics at CEPAR in the UNSW Business School. Several independent sources have placed him among the top economists internationally in terms of citations and the impact of his work. Recently he was ranked as top economist in the 1990 PhD cohort by Research Papers in Economics (RePEc). He is considered to be a world leader in choice modelling and his expertise is sought both nationally and internationally. In 2009 he prepared a report on tax transfers and labour supply for the Australian Treasury’s Commission on Australia’s Future Tax System. He has been a visiting scholar at the International Monetary Fund at various times throughout his career. Gross return illusion and Fee avoidance: Experimental evidence - Mikhail Anufriev (University of Technology Sydney) Mikhail Anufriev joined the University of Technology Sydney in 2012. He received his PhD in Economics from the Sant'Anna School of Advanced Studies (Italy) in 2005 and held an academic position at the University of Amsterdam. In his research he uses analytic, simulation and experimental methods. His primary research interests are in the areas of learning and bounded rationality in economics and finance, nonlinear economic dynamics, and experimental economics. Prof Anufriev contributed to the theories of endogenous financial bubbles and crashes. Within this framework, he investigated various policy questions, such as the extent of effective monetary policy and efficiency of financial regulations. His work has been published in the American Economic Journal: Microeconomics, the Journal of the European Economic Association, the Journal of Economic Dynamics and Control, the Journal of Banking and Finance, the Journal of Economic Behavior and Organization, among others. His current research projects include experimental investigation of household investment decisions as well as theoretical and empirical study of economic and financial networks. |
PROGRAM Day 2: 6 September 2019 |
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10:00 – 12:00 |
THEME 4: Evidence-based Ways to Overcome Confusion and its Effects in Financial Decision Making Chair – Hazel Bateman (UNSW) Presenters - Robert Slonim (University of Sydney), Fiona Maguire (Australian Securities and Investments Commission) This theme discussed evidence-based ways to overcome confusion in financial decision making with the aim of improving consumers decisions and financial wellbeing. It explored different ways of information provision and product disclosure that facilitate consumer understanding. This theme also looked at interventions such as nudging and boosts as possible ways to guide consumers to better choices. Perspectives on Confusing Markets: "All you need is TRUST" - Robert Slonim (University of Sydney) Bob Slonim came to the University of Sydney in 2008 from the Weatherhead School of Management at Case Western Reserve University in Cleveland Ohio. He holds a PhD from Duke University and MBA and BA degrees from the University of California Berkeley. Professor Slonim is best recognised as a pioneer in the area of experimental economics and has written extensively on learning, trust and the economics of charitable behaviour and blood donations. Professor Slonim has been very innovative in his use of experimental methods that have theoretical importance and have also represented important findings for matters of public policy. Fiona Maguire (Australian Securities and Investments Commission) Fiona Maguire is a senior specialist in ASIC’s behavioural research & policy unit. She is a lawyer and specialist in behavioural science with over 20 years experience spanning consumer law, policy and research across the full range of financial services. At ASIC, this has included investigation and reform of industry conduct in banking, credit and insurance markets, as well as research to understand the impact of that conduct on consumer experiences and outcomes. She applies behavioural techniques to influence consumer, market and staff behaviour including through ASIC’s behaviourally informed approach to regulation. Fiona holds a Masters in Behavioural Science from the London School of Economics and a Bachelor of Law (Hons) and Bachelor of Arts from Griffith University. |
13:00 – 15:00 |
THEME 5: Facilitating Decision Making in the Fintech Era Chair – Julie Agnew (College of William & Mary) Presenters - Andrew Grant (University of Sydney), Susan Thorp (University of Sydney) Given the fast rise of fintech as well as its disruptive impact on the financial services industry, this workshop theme explored how fintech products and services can be used to reduce consumer confusion and improve their choices. Itl discussed fintech services such as product configurators, comparison and robo advice based on their ability to foster financial wellbeing. Facilitating decision making in the fintech area - Andrew Grant (University of Sydney) Andrew Grant is a senior lecturer in the Discipline of Finance. His main areas of expertise are behavioural finance, individual investor decision making, and betting markets, focusing on preference and belief-based asset allocation and asset pricing decisions, including developing models of asset allocation and optimal investor behaviour in betting markets. Other broad dimensions of his research explore the interaction of individual investors with financial institutions, and how their behaviour may be predicted based on numerical scores or past performance, and what anchors drive individual investors to the marketplace. He has also been engaged with industry, with studies of alternative finance and marketplace lending in the Asia-Pacific. He has appeared as a guest commentator in print, radio, and on television, discussing issues such as gambling market and banking regulation, personal savings and asset allocation model evaluation. Defaults, Disclosures, Advice and Calculators: One size does not fit all - Susan Thorp (University of Sydney) Susan Thorp is Professor of Finance at the University of Sydney. She researches consumer finance, focusing on retirement savings. She uses theoretical, empirical and experimental techniques to test consumer responses to advice, disclosures and choice architecture. Her research has been published in leading international academic journals including Management Science, the Review of Finance and the Economic Journal, and has attracted over three million dollars in public and industry funding. Susan is a member of the Steering Committee of the Melbourne Mercer Global Pensions Index, an annually compiled internationally recognised index of pension system quality, a member of the Research Committee of the OECD/International Network on Financial Education and a Director of the Superannuation Consumers Centre. |
15:00 – 15:30 |
Closing Remarks Hazel Bateman (CEPAR Deputy Director, UNSW) |
Direct event or media enquiries to: Silke Weiss