Measuring and Debiasing Consumer Pension Risk Attitudes
The review in this paper yields four specific policy implications for firms currently providing pension products, and provides suggestions to improve risk measurement and debiasing strategies in pension product advice. This panel paper addresses the issue of how best to measure and debias consumer risk attitudes in the domain of pension product decisions.
The paper first reviews the academic literature on the measurement of attitudes towards risk. Next, after reviewing past and current approaches to measuring consumer risk attitudes, the paper discusses potential biases in these approaches. A review is also made of the literature on whether or not customers will accept product advice that is based on unbiased measures of consumer risk attititudes. This review may assist firms in understanding why customers may or may not appreciate financial recommendations based on debiased risk profiles. The paper then contrasts the academic state-of-the-art on measuring consumer risk attitudes with current practice in the financial advice industry. The paper concludes by summarizing the different challenges in improving and debiasing risk measurement in pension risk communication.