Cognitive drivers of suboptimal financial decisions: Implications for financial literacy campaigns

The quality of consumers financial decisions has been a focus of growing concern for marketing practitioners, educators and regulators. Although financial literacy programmes have over the years attempted to combat consumers irrational economic decisions, empirical evidence points to robust and persistent patterns of suboptimal economic decisions that span the socio-economic and educational spectrum. The evidence suggests that the underlying forces leading to poor financial decision making may not easily be removed solely by improving consumer education, and may be driven by how the human cognitive system operates. This study profiles five decision patterns that account for a range of suboptimal financial decisions by consumers, and provides specific prescriptions on how financial literacy programmes may need to counter these forces. © 2009 Palgrave Macmillan 1363-0539.