Spring 2013 MBA Course

B8901-001: The Psychology and Economics of Consumer Finance

Block Week Jan. 14-18 - 09:00AM to 06:00PM

Location: On-Campus (Please see description)

Instructor: Eric Johnson; Stephen Zeldes

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We will use the tools of behavioral economics and psychology to better understand consumer financial decisions and the consumer finance industry.  We will examine markets for borrowing (mortgages, credit cards, peer-to-peer lending, payday loans), saving (401(k)s, strategies to promote saving, optimal asset allocation), and insurance (including life, health, and longevity).  We will emphasize both how people do and how people should make financial decisions, and the implications for financial services firms.  The goal of the course is to not only understand consumer finance, but to emphasize how the lessons from psychology and economics can be used to improve business decisions, foster innovation, and enhance public policy.

This course appeals to a wide variety of students:  First are those who want to work for financial services firms, including asset management, banking, and insurance. Second, are those who are interested in consulting, investment banking, or private equity, and need to understand and value firms that provide financial services to consumers.  Third, those interested in marketing and consumer decisions more generally will find this course’s principles to be helpful.  Fourth, it should appeal to anyone interested in broader public policy issues (consumer finance is at the heart of many important public policy debates, including the role of the newly-established Consumer Financial Protection Bureau.) Finally, the course will be helpful to anyone interested in learning how to better manage their own personal finances and prevent mistakes.

The course will include lectures, class discussions, guest speakers, case analysis, small assignments, and student group projects and presentations. It will be highly interactive, and you are expected and encouraged to take part in class discussions.  Both professors will participate in all of the classes.  We bring different perspectives to these questions (Johnson is a psychologist and a professor in the Marketing division, and Zeldes is an economist and a professor in the Finance and Economics division), and we look forward to some lively debates!



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Eric Johnson

Norman Eig Professor of BusinessEric Johnson is a faculty member at the Columbia Business School at Columbia University where he is the inaugural holder of the Norman Eig Chair of Business, and Director of the Center for Decision Sciences. His research examines the interface between Behavioral Decision Research, Economics and the decisions made by consumers, managers, and their implications for public policy, markets and marketing. Among other topics, Johnson...

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Stephen Zeldes

Benjamin Rosen Professor of Finance and EconomicsProfessor Zeldes has taught the core and flex-core "Global Economic Environment" courses, an interdisciplinary course titled "The Psychology and Economics of Consumer Finance",an elective course called "The Future of Retirement Wealth," and a master class on "Macro Investing." His research has examined a wide range of applied issues in macroeconomics and finance, including Social Security reform, the determinants of household saving, participant behavior in...

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