Center for Financial and Economic Decision Making

The mission of the Center for Financial and Economic Decision Making (CFED), a part of RAND Corporation's Labor and Population research division, is to understand how people in the United States and around the world collect and think about financial information and how successfully they match their financial decisions to their interests and goals. CFED's researchers are dedicated to finding solutions that can improve the decision making that affects the financial well-being of individuals, families, and nations. Since its inception in 2008, CFED has sought answers to a wide range of fundamental economic and financial real-world questions. The center unites researchers engaged in behavioral economics, public finance, financial literacy, economic development, and psychology. CFED researchers work with international teams of economists, demographers, psychologists, and other experts from a variety of institutions such as Harvard University, Carnegie Mellon University, the University of Michigan, and Innovations for Poverty Action.

Research is targeted to both academic and policy audiences. Center staff have published research in academic peer-reviewed journals and working paper series and have briefed Congress and other interested policymakers on important policy-relevant findings. CFED has produced studies on wide-ranging topics associated with financial choice and wellbeing: the role confidence plays in financial decision- making, how households in the U.S. are helping one another cope with the global economic downturn, the ways in which consumers use banks and credit unions, and evaluations of various interventions that may help workers make better decisions about their retirement savings plans. A recent survey-based study examined the ways in which individuals make financial choices in response to financial advice, providing critical insight to policymakers interested in increasing citizens' understanding of their own financial decisions and prospects. Another recent study focuses on how well investors with different degrees of financial literacy understand the fees attached to their mutual funds. The findings from this study can benefit both policy makers and financial institutions as they seek to improve standards of informational disclosure to different groups of people seeking to prepare for their retirement.

The center also has a keen interest in understanding and improving financial decisionmaking internationally. In the developing world, CFED has provided research to review and evaluate policies and programs that affect household financial decision making in low and middle-income countries, providing concrete insight into the interactions between economic, political, and social variables that can significantly impact national welfare, growth and development.

CFED research has been supported by organizations such as the Department of Labor, the U.S. Securities and Exchange Commission, the Department of the Treasury, the World Bank, the Social Security Administration, the Organization for Economic Co-Operation and Development, and the Canadian Ministry of Finance. CFED also works with a variety of organizations, including non-profit, government and private sector institutions, to bring cutting-edge research ideas into effective practice.