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Researching and Restructuring Household Finance

Americans are feeling more negative about their personal finances than they have in four decades.
Americans are feeling more negative about their personal finances than they have in four decades. (Image credit: Barbara Reddoch |

This ScienceLives article was provided to LiveScience in partnership with the National Science Foundation.

Jonathan Zinman's research focuses on household finance — his work tests theories of how people make intertemporal decisions and how firms and consumers interact in markets. The work closely examines the merits of incorporating specific features of psychology into economic models. Zinman also works on methodological questions, developing randomized control field experiments and survey designs that permit sharp tests of economic theories and related policy questions.

Zinman has published papers and has forthcoming papers in several top journals in economic, finance and general-interest science, and his work has been extensively featured in popular and trade media.

He applies his research by working with policymakers and financial institutions around the globe, including working directly with institutions to develop and test innovations — in pricing, product development, marketing, risk assessment, risk management and client communication — that are profitable for firms and beneficial to their clients. Jon lives and snowboards in Lyme, New Hampshire, with his wife and three kids. For more on Zinman and his work, see the recent press release about his work entitled "Can Small Loans Reduce Poverty?"and read his responses to the ScienceLives 10 Questions below.

Jonathan Zinman tests theories of how people make intertemporal decisions, and how firms and consumers interact in markets. (Image credit: Joe Mehling, Dartmouth College)

Name: Jonathan Zinman Age: 40 Institution: Dartmouth College Department of Economics; Academic Director, U.S. Household Finance Initiative of Innovations for Poverty Action Field of Study: Household Finance; Behavioral Economics

What inspired you to choose this field of study? Introspection. When I decided to start focusing on household finance back in 2002 or 2003, it was not a recognized subfield in academic economics or finance. But it just didn't make sense to me to have a corporate finance subfield and not a household finance subfield. Everyone is part of a household (and not everyone is part of a corporation)!

Everyone makes financial decisions. There's lots of evidence from psychology and other decision sciences that suggest financial decision making could be prone to biases and limitations because it's a relatively abstract domain, and because opportunities for learning about many high-stakes decisions are limited. Casual observation suggests that markets often exacerbate, rather than mitigate, those limitations. So working on household finance seemed like a wide-open opportunity.

There was (and still is) so much to discover about whether, to what extent, and how people and markets go wrong. We are also still figuring out how to design policy and practice that can do better. I had some previous research and practical experience that helped me get traction on interesting research questions and workable methodologies, so I went for it.

What is the best piece of advice you ever received? "Spend 90 percent of your time on whatever work is closest to being published," which is essential advice for any junior faculty member. A close second: "Ask not 'What if?' Ask 'What can I do?'"

What was your first scientific experiment as a child? I was more of a humanities type as a kid. So I guess some thought experiments on the nature of Being and The Good. (Thanks Dad!) Oh, and countless thought experiments on professional sports (hypothetical trades, lineups, etc.)

What is your favorite thing about being a researcher? You are able to rewrite your own job description every day.

What is the most important characteristic a researcher must demonstrate in order to be an effective researcher? I'd say discipline. Creativity and resourcefulness are also essential, I think, but tend to be a bit overrated. Given the option, I'd choose discipline. Even artists, who often are seen as very creative, focus on finding a disciplined routine and an environment that helps them get good work done. I do the same.

I focus a lot on scheduling when and where — office, home, car, plane, field — I'm going to be working, with an eye towards carving out blocks of uninterrupted time for thinking, design work and writing.

What are the societal benefits of your research? Building an evidentiary base, both basic and applied, for policymakers and practitioners that want to help people make better financial decisions.

Who has had the most influence on your thinking as a researcher? Two of my co-authors, Dean Karlan, of Yale University, and Victor Stango, of the University of California at Davis, have had the most influence on my thinking.

What about your field or being a researcher do you think would surprise people the most? Being a researcher is mostly toil. In my line of work, that means grinding out various details of fieldwork, data analysis and rewriting/editing. I think most laypeople who give research a second thought focus quite understandably on the "eureka" moments and on the public lectures. I do find those parts of the job to be the most exciting, and I'm constantly trying to come up with ways to spend more time and energy on those parts. But the great thing is that I mostly enjoy the toil too. It's kind of like working on puzzles for a living.

If you could only rescue one thing from your burning office or lab, what would it be? Unless one of my kids is hanging out at the office, it's definitely my laptop.

What music do you play most often in your lab or car? I play old-school and Zulu Nation hip-hop, and new-school/indie electronica.

Editor's Note: This research was supported by the National Science Foundation (NSF), the federal agency charged with funding basic research and education across all fields of science and engineering. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author and do not necessarily reflect the views of the National Science Foundation. See the ScienceLives archive.