Economist Vicki L. Bogan joined the Sanford School this fall as a professor and faculty affiliate in the Samuel DuBois Cook Center on Social Equity. She will teach a core class in the Economics of the Public Sector, as well as a course titled Inequality, Household Finance, and Public Policy, in which she plans to draw heavily on her research.
Bogan’s area of specialization is family finance and financial decision-making. She is particularly interested in behavioral finance, which examines how psychological influences affect financial decision-making.
“We have all these financial models that talk about how people should behave and invest their money,” she says, “but I have focused on what they actually do. What causes people to not behave in the ways that economic models say they should? Is it behavioral biases, market frictions, or barriers to market entry?”
We have all these financial models that talk about how people should behave and invest their money but I have focused on what they actually do. What causes people to not behave in the ways that economic models say they should?
In seeking answers, Bogan has examined how family structure influences the way people save, invest, plan for retirement, and finance their children’s college education. She has also focused on how mental health issues such as depression and anxiety affect financial choices in ways that could be detrimental to the fiscal health of a family.
Saving money is hard, Bogan says, because it requires delayed gratification. “You have to give up something now for a future benefit. People’s preferences are ‘time inconsistent,’ meaning you do something now that in the future you will wish your past self hadn’t done. Everyone says you should save for retirement, but many people don’t.”
Another deterrent is what Bogan calls “status quo bias” or inertia. “Trying to figure out how much you should save and what you should invest in is not easy,” she says. “So people default to doing nothing.” The inertia keeps them from actively managing and saving for retirement.
Doing work that can be applied
Bogan loves the practical nature of her work. She has “always wanted to do things that are applied.” In high school, she loved math, and when she was accepted to Brown University, she planned to major in math. But when the course catalog came in the mail before her first year, she discovered Applied Mathematics and Economics. Her mind was made up.
“It was so exciting to think about the application of math,” she recalls. “Not just to physical sciences like physics, but to social sciences like economics.” She settled on that major before her first year even started and has “never regretted it for a moment.”
After earning her bachelor’s degree, she worked in the telecom industry but didn’t feel intellectually challenged. So she headed to the Wharton School at the University of Pennsylvania for an M.B.A. in Finance & Strategic Management. A stint at management consulting followed, but what really inspired her was finance-related research. She returned to Brown for a Ph.D. in economics, focusing on family finance and financial decision-making.
to Duke from Cornell
Bogan comes to Duke from Cornell University, where she was the Geller Family Professor of Applied Economics and Policy in the SC Johnson College of Business and the director of the Institute for Behavioral and Household Finance, which she founded in 2014. The institute hosted research symposia, conducted a research scholars program for master’s students, and developed a financial outreach program that trained students in financial literacy from middle school to grad school.
She also has served as chair of the Academic Research Council of the Consumer Financial Protection Bureau and testified before the Congressional Financial Services Committee about the gamification of investments. “I have always wanted to be policy-relevant,” she says, and to understand how things like saving and investment can improve people’s lives.”
Now, she is “very excited” by the opportunity to come to Sanford because she knows it is a leading policy school. The chance to work with “an impressive group of brilliant colleagues who are all focused on policy-relevant research was the main draw,” she says. Plus, she and her family like the Durham area and enjoy being in a larger city than the one they left.