Course notes on applied consumer financial decision making


Jason Collins


July 27, 2022


In this online book, I examine the drivers of financial decisions made by individuals and households. I look at the economic foundations of financial decision making, the characteristics of consumers making decisions, how we make financial decisions and how to improve consumer financial wellbeing. The material is designed to be useful in applied settings.

The book is based on a subject I teach in as part of UTS’s Graduate Certificate and Masters of Behavioural Economics. (The subject is called Behavioural Approach to Investment and Insurance Decisions, but the material is broader than that). It is a half-size subject taught through a mix on online-self guided learning, online seminars and in-person weekend workshops.

The Graduate Certificate and Masters is for post-graduates with no assumed prior knowledge of economics or behavioural economics. The subject on which this book is based is taken after introductory economics and behavioural economics units.

This book covers the following areas:

  • Foundations: What financial decisions do we need to make? What are the classical economic explanations for why we obtain banking, insurance and investment products?
  • Financial Decision Maker Characteristics: What are some of our characteristics that affect our financial decisions?
  • Financial behaviours: How do we actually make financial decisions? What are the explanations behind our patterns of behaviour?
  • Improving financial wellbeing: How can financial products be designed and distributed to improve customer decision making? What other external tools can improve financial decisions?