American consumers today face a dazzling array of financial products and services. But, not a day goes by without a headline story that highlights the perils for those who make uninformed choices when it comes to borrowing, saving and investing. Over the past decade more than 10 million American households filed for personal bankruptcy. Many more have wrestled with loan delinquencies and the threat of a mortgage foreclosure, always against the backdrop of the growing urgency to set aside funds for retirement. Researchers have established strong causal links between household financial distress and marital problems, extended illness, declining work performance, family discord and diminished quality of life. How much of this could be prevented by educating young people how to manage their finances and make informed choices as they move into adult life? That question inspired the creation of the Take Charge America Institute here at the University of Arizona. Interdisciplinary research programs and a strong tradition of community and national outreach made the Norton School for Family and Consumer Sciences the ideal host.
The TCAI has established an aggressive set of research-based outreach programs to tackle the challenge. I’m delighted to be a part of the University’s effort to build the Institute into a nationally recognized intellectual hub for developing effective financial education programs and policy.
Since the early 1990s, I’ve conducted research projects on the impact of credit market regulations and the pros and cons of putting regulatory limits on financial products in ways that help consumers make good credit choices. A powerful lesson emerges from that work: neither regulation nor market competition is sufficient to prevent consumers from making poor financial decisions in today’s complex markets for financial services. Consumers simply need better preparation in order to help themselves. The TCAI offers an exciting chance to take the insights from cutting-edge research on consumer decision-making and incorporate them into financial education outreach programs that help consumers of all ages to improve their skill and confidence in managing their financial affairs.