This chapter investigates the extent to which behavioural economics might explain some of the problematic financial behaviours that are observed amongst consumers, including low levels of retirement saving and high levels of credit use. It also asks how behavioural economics can help policy makers to improve financial education, from take-up to completion. Various tools available to policy makers to help consumers overcome psychological constraints are discussed. These include supervision and regulation of financial services, and the design of default options.

This chapter starts by noting that the provision of knowledge and information in itself is not sufficient; the information must be incorporated into daily life. It then goes on to describe an innovative solution developed for Brazilian school children. The approach combines information and recommendations about personal financial issues with information about the way in which psychological factors may both help and hinder behaviour. This psychological guidance is intended to raise the pupil’s awareness of their own traits and trigger discussions about the typical psychological factors that influence financial decision making.