New article by IMFS Professor Michael Haliassos published: "New Frontiers in Household Finance"
Household finance has continued to experience remarkable growth since the publication of our review article a few years ago (Gomes, Haliassos, and Ramadorai, 2021). This is not surprising, given the field’s continuing practical relevance, the increasing availability of granular data on the key financial decisions of individuals, innovative methods to generate and process such data, and the development and estimation of structural models to guide and interpret the results of empirical analysis. Rather than covering these developments in a new review article, this introduction uses the innovative articles in this special issue as points of departure for an in-depth exploration of some important recent themes in the literature.
The financial decisions of households are enormously complex. A partial list of the factors determining these decisions include: individual preferences and the way these factor into household preferences, households’ ability to acquire and process information as well as to evaluate the quality of advice relevant to their decisions, the beliefs of decision-makers about their own ability to make financial decisions, households’ beliefs about the current and future economic environment including both risks and returns, and households’ beliefs about their own current and future financial resources as well as any constraints that they may face. The papers in this volume span many of these factors, and we organize this introduction accordingly.