Press Releases

Professor Xavier Gabaix Awarded TIAA-CREF Institute Certificate of Excellence for His Research

Xavier Gabaix, Professor of Finance and Martin J. Gruber Chair in Asset Management, and his colleagues received a certificate of excellence from the TIAA-CREF Institute for their paper, “The Age of Reason: Financial Decisions over the Life Cycle with Implications for Regulation.” In the paper, the authors analyze 10 different types of credit behavior of people of different ages and conclude that younger and older adults may need additional guidance with respect to financial matters; they find that the "age of reason" (when people make the fewest financial mistakes) is 53 years old.

The authors also analyze regulatory regimes that may help all individuals avoid making financial mistakes including:

  • Recognizing that improved disclosure is not necessarily effective in improving financial choices, because complexity may still overwhelm consumers
  • Helping consumers evaluate if they are sophisticated by giving them tests of financial savvy
  • Regulators could increase the fiduciary duties of individuals that sell financial products. For example, all sales of financial products could be required to be conducted by an agent with a fiduciary duty.
The findings in the Age of Reason paper about financial mistakes made primarily by both younger and older adults are extremely important and the authors’ analyses of several approaches to help individuals avoid costly errors add great value for both policy makers and firms like TIAA-CREF who seek to enhance lifelong financial security,” said Stephanie Bell-Rose, head of the TIAA-CREF Institute.

Xavier Gabaix joined NYU Stern in September 2007. Before joining NYU Stern, he was an Associate Professor of Economics at the Massachusetts Institute of Technology. Professor Gabaix’s research interests focus on asset pricing, executive pay, the causes and consequences of seemingly irrational behavior, the origins scaling laws in economics, and macroeconomics. His research has been published in many journals including the Journal of Finance, American Economic Review, Quarterly Journal of Economics and Nature.