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Full-Text Articles in Law
Opening Schumer’S Box: The Empirical Foundations Of Modern Consumer Finance Disclosure Law, Hosea H. Harvey
Opening Schumer’S Box: The Empirical Foundations Of Modern Consumer Finance Disclosure Law, Hosea H. Harvey
University of Michigan Journal of Law Reform
This Article explores the fundamental failure of Congress’ twenty-five-year quest to utilize disclosure as the primary tool to both regulate credit card issuers and educate consumers. From inception until present, reforms to this disclosure regime, even when premised on judgment and decision-making behavioralism, were nomothetic in orientation and ignored clear differences in population behavior and the heterogeniety of consumers. Current law prohibits credit card issuers from acquiring consumer socio-demographic data and prevents issuers and regulators from using market and policy experimentation to enhance disclosure’s efficacy. To explain why this regime was structured this way and why it must change, this …
Behaviorally Informed Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir
Behaviorally Informed Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir
Book Chapters
Policy makers typically approach human behavior from the perspective of the rational agent model, which relics on normativc, a priori analyses. The model assumes people make insightful, well-planned, highly controlled, and calculated decisions guided by considerations of personal utility. This perspective is promoted in the social sciences and in professional schools and has come to dominate much of the formulation and conduct of policy. An alternative view, developed mostly through empirical behavioral research, and the one we will articulate here, provides a substantially difierent perspective on individual behavior and its policy and regulatory implications. According to the empirical perspective, behavior …
The Case For Behaviorally Informed Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir
The Case For Behaviorally Informed Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir
Book Chapters
Policymakers approach human behavior largely through the perspective of the “rational agent” model, which relies on normative, a priori analyses of the making of rational decisions. This perspective is promoted in the social sciences and in professional schools, and has come to dominate much of the formulation and conduct of policy. An alternative view, developed mostly through empirical behavioral research, provides a substantially different perspective on individual behavior and its policy implications. Behavior, according to the empirical perspective, is the outcome of perceptions, impulses, and other processes that characterize the impressive machinery that we carry behind the eyes and between …
Behaviorally Informed Financial Services Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir
Behaviorally Informed Financial Services Regulation, Michael S. Barr, Sendhil Mullainathan, Eldar Shafir
Other Publications
Financial services decisions can have enourmous consequences for household well-being. Households need a range of financial services - to conduct basic transactions, such as receiving their income, storing it, and paying bills; to save for emergency needs and long-term goals; to access credit; and to insure against life's key risks. But the financial services system is exceedingly complicated and often not well-designed to optimize house-hold behavior. In response to the complexity of out financial system, there has been a long running debate about the appropriate role and form of regulation. Regulation is largely stuck in two competing models - disclosure, …
Private Liability For Reckless Consumer Lending, John A. E. Pottow
Private Liability For Reckless Consumer Lending, John A. E. Pottow
Articles
Congress recently enacted amendments to the Bankruptcy Code that possess the overarching theme of cracking down on debtors due to the increasing rate at which individuals have been filing for bankruptcy. Taking into account the correlation between the overall rise in consumer credit card debt and the rate of individual bankruptcy filings, the author nevertheless hypothesizes that not all credit card debt is troubling. Instead, the author proposes that the catalyst driving individual bankruptcy rates higher than ever is the level of "bad credit"-or credit extended to individuals even though there is a reasonable likelihood that the individual will be …
"Contracting" For Credit, Ronald J. Mann
"Contracting" For Credit, Ronald J. Mann
Michigan Law Review
On a recent day, I used my credit cards in connection with a number of minor transactions. I made eight purchases, and I paid two credit card bills. I also discarded (without opening) three solicitations for new cards, balance transfer programs, or other similar offers to extend credit via a credit card. Statistics suggest that I am not atypical. U.S. consumers last year used credit cards in about 100 purchasing transactions per capita, with an average value of about $70. At the end of the year, Americans owed nearly $500 billion dollars, in the range of $1,800 for every man, …
The Return Of Bargain: An Economic Theory Of How Standard-Form Contracts Enable Cooperative Negotiation Between Businesses And Consumers, Jason Scott Johnston
The Return Of Bargain: An Economic Theory Of How Standard-Form Contracts Enable Cooperative Negotiation Between Businesses And Consumers, Jason Scott Johnston
Michigan Law Review
Among attorneys, judges, and legal academics, there is virtual consensus that the widespread use by business firms of standard-form contracts in their dealings with consumers has completely eliminated bargaining in consumer contracts. I believe that this perception is false, that rather than precluding bargaining and negotiation, standard-form contracts in fact facilitate bargaining and are a crucial instrument in the establishment and maintenance of cooperative relationships between firms and their customers. On this view, which I elaborate below, firms use clear and unconditional standard form contract terms not because they will insist upon those terms, but because they have given their …
Abuse Prevention 2005, James J. White
Abuse Prevention 2005, James J. White
Articles
Today I do not debate the empirical question (what is the cause of the increase in bankruptcy filings?) nor do I address the buried moral question (who deserves the protection of bankruptcy law?). Rather, I speculate about the consequences of 2005 amendments to the Bankruptcy Code and about the reasons it will achieve or fail to achieve the goals of its sponsors. Along the way I hope to learn something about how law changes, or fails to change behavior.
The Usury Trompe L'Oeil, James J. White
The Usury Trompe L'Oeil, James J. White
Articles
This Article demonstrates how the interaction of a federal statute passed in 1864,1 a case decided by the Supreme Court in 1978,2 and modem technology has legally debarred every state legislature from controlling consumer interest rates in its state-but not from passing laws that appear to do so-and has politically debarred the Congress from setting federal rates to replace the state rates. As a consequence, the elaborate usury laws on the books of most states are only a trompe l'oeil, a "visual deception... rendered in extremely fine detail ... ." The presence of these finely detailed laws gives the illusion …
Consumer Protection In The Credit Card Industry: Federal Legislative Controls, John C. Weistart
Consumer Protection In The Credit Card Industry: Federal Legislative Controls, John C. Weistart
Michigan Law Review
Credit cards have been used as a means of facilitating delayed-payment purchases since early in this century. The first credit card systems were operated by retailers and service organizations in connection with the merchandising of their products. While such programs were used in local markets by department stores, oil companies were the first issuers to recognize the potential of credit card plans in larger geographical areas. In the early 1950's a new phase in credit card development evolved with the emergence of firms engaging solely in the extension of credit. These firms-Diners' Club, American Express, and Hilton Credit Corporation with …