The persistence of cognitive biases in financial decisions across economic groups

Data availability: All data will be posted open access via https://psyarxiv.com/mrxy6/ and in interactive form via https://public.tableau.com/app/profile/kai.ruggeri. We will post these only once an accepted version of all analyses is possible to avoid confusion based on version control.While economic inequality continues to rise within countries, efforts to address it have been largely ineffective, particularly those involving behavioral approaches. It is often implied but not tested that choice patterns among low-income individuals may be a factor impeding behavioral interventions aimed at improving upward economic mobility. To test this, we assessed rates of ten cognitive biases across nearly 5000 participants from 27 countries. Our analyses were primarily focused on 1458 individuals that were either low-income adults or individuals who grew up in disadvantaged households but had above-average financial well-being as adults, known as positive deviants. Using discrete and complex models, we find evidence of no differences within or between groups or countries. We therefore conclude that choices impeded by cognitive biases alone cannot explain why some individuals do not experience upward economic mobility. Policies must combine both behavioral and structural interventions to improve financial well-being across populations.This research was supported in part by the National Science Foundation (#2218595) and by Undergraduate Global Engagement at Columbia University. Additional support was provided to individual researchers from the Columbia University Office of the Provost, Masaryk University Centre for International Cooperation, and the Benjamin A. Gilman International Fund from the United States Department of State. This research was funded in part, by the UKRI [MR/N013468/1]

The psychology and policy of overcoming economic inequality

Data and materials’ availability: All data are publicly available for the survey data used (https://osf.io/njd62/) and from the UN Gender Inequality Index (https://hdr.undp.org/data-center/documentation-and-downloads). Financial transaction data were provided through an agreement with Columbia Business School.Recent arguments claim that behavioral science has focused – to its detriment – on the individual over the system when construing behavioral interventions. In this commentary, we argue that tackling economic inequality using both framings in tandem is invaluable. By studying individuals who have overcome inequality, “positive deviants,” and the system limitations they navigate, we offer potentially greater policy solutions.This research was supported in part by the National Science Foundation (no. 2218595) and by Undergraduate Global Engagement at Columbia University. Additional support was provided to individual researchers from the Columbia University Office of the Provost, Masaryk University Centre for International Cooperation, and the Benjamin A. Gilman International Fund from the United States Department of State