{"id":54,"date":"2025-05-06T10:32:19","date_gmt":"2025-05-06T14:32:19","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=54"},"modified":"2025-05-06T10:32:19","modified_gmt":"2025-05-06T14:32:19","slug":"should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"<p><span data-contrast=\"auto\">A <\/span><a href=\"https:\/\/pubs.aeaweb.org\/doi\/pdfplus\/10.1257\/jep.36.4.167\"><span data-contrast=\"none\">recent article by James Choi, a Finance Professor at Yale University, in the Journal of Economic Perspectives<\/span><\/a><span data-contrast=\"auto\"> looked at personal finance advice by economists and compared it to the advice given by non-economists in the popular press. The article found differences between the advice given by the two groups that often reflect alternative assumptions about personal financial goals. There are also many similarities in the advice given by the two groups.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Both economists and non-economists recommend investing in passively managed or indexed mutual funds because index funds tend to outperform actively managed mutual funds. Actively managed funds, which routinely buy and sell assets, charge investors higher management fees than buy-and-hold index-based portfolios. Few financial advisors can \u201cbeat the market,\u201d at least not by an amount necessary to make up for their higher management fees. <\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Both economists and non-economists recommend that people invest so that the equity share of individual portfolios should be \u201chump-shaped\u201d with respect to age. In the long run, the return on equities\u2014common stocks\u2014is much higher than on debt instruments or bonds. But short-term variability in common stock prices is much higher than in bonds. Since equities have higher returns and variability, people in their early and mid-careers should invest more in equities, but then in their late career and retirement invest less in equities to have more certain retirement incomes.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The major differences between economists and non-economists are their assumptions about the goals of individual investors. Economists assume investors start with no wealth, want to die with minimal wealth, and want to smooth their consumption over their lifetimes. Economists also tend to assume people are rational and want to optimize their portfolios. Non-economists tend to assume people want to accumulate wealth for use in retirement and to pass on wealth to future generations. Non-economists also tend to assume people are emotional and need simple rules to follow.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Because most people\u2019s incomes are low when they are young and old and higher in middle age, economists recommend low saving rates when people are young, higher savings in midlife, and then annuitize income or negative savings in retirement. Non-economists typically recommend saving 10-15 percent of income while working for retirement. Then they don\u2019t recommend annuitizing their income, and many recommend keeping people\u2019s real level of wealth constant or spending 3-5% of assets per year during retirement.\u00a0 Considering and balancing the perspective of economists and non-economists is likely the best course for the individual investor!\u00a0\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:480}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A recent article by James Choi, a Finance Professor at Yale University, in the Journal of Economic Perspectives looked at personal finance advice by economists and compared it to the advice given by non-economists in the popular press. The article found differences between the advice given by the two groups that often reflect alternative assumptions [&hellip;]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[441],"tags":[577,576,524,579,578,573,570,575,571,572,565,567,574,97,569,568,442,580,444,566],"class_list":["post-54","post","type-post","status-publish","format-standard","hentry","category-investment","tag-bond","tag-common-stock","tag-economist","tag-equities","tag-equity","tag-financial-advisor","tag-indexed-mutual-fund","tag-individual-portfolio","tag-investment","tag-investor","tag-james-choi","tag-journal-of-economic-perspectives","tag-management-fees","tag-market","tag-mutual-fund","tag-personal-finance","tag-portfolio","tag-retirement-income","tag-wealth","tag-yale"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"A recent article by James Choi, a Finance Professor at Yale University, in the Journal of Economic Perspectives looked at personal finance advice by economists and compared it to the advice given by non-economists in the popular press. The article found differences between the advice given by the two groups that often reflect alternative assumptions [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:site_name\" content=\"Econ Briefs\" \/>\n<meta property=\"article:published_time\" content=\"2025-05-06T14:32:19+00:00\" \/>\n<meta name=\"author\" content=\"christianhartselle\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"christianhartselle\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/06\\\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/06\\\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\"},\"author\":{\"name\":\"christianhartselle\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#\\\/schema\\\/person\\\/53f4e0b981fd42f34cbb306b9ad62622\"},\"headline\":\"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz\",\"datePublished\":\"2025-05-06T14:32:19+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/06\\\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\"},\"wordCount\":427,\"commentCount\":0,\"keywords\":[\"bond\",\"common stock\",\"economist\",\"equities\",\"equity\",\"financial advisor\",\"indexed mutual fund\",\"individual portfolio\",\"investment\",\"investor\",\"James Choi\",\"Journal of Economic Perspectives\",\"management fees\",\"market\",\"mutual fund\",\"personal finance\",\"portfolio\",\"retirement income\",\"wealth\",\"Yale\"],\"articleSection\":[\"Investment\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/06\\\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/06\\\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\",\"url\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/06\\\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\",\"name\":\"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#website\"},\"datePublished\":\"2025-05-06T14:32:19+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#\\\/schema\\\/person\\\/53f4e0b981fd42f34cbb306b9ad62622\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/06\\\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/06\\\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/2025\\\/05\\\/06\\\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#website\",\"url\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/\",\"name\":\"Econ Briefs\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/#\\\/schema\\\/person\\\/53f4e0b981fd42f34cbb306b9ad62622\",\"name\":\"christianhartselle\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g\",\"caption\":\"christianhartselle\"},\"url\":\"https:\\\/\\\/people.bsu.edu\\\/econbriefs\\\/author\\\/christianhartselle\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/","og_locale":"en_US","og_type":"article","og_title":"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs","og_description":"A recent article by James Choi, a Finance Professor at Yale University, in the Journal of Economic Perspectives looked at personal finance advice by economists and compared it to the advice given by non-economists in the popular press. The article found differences between the advice given by the two groups that often reflect alternative assumptions [&hellip;]","og_url":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/","og_site_name":"Econ Briefs","article_published_time":"2025-05-06T14:32:19+00:00","author":"christianhartselle","twitter_card":"summary_large_image","twitter_misc":{"Written by":"christianhartselle","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/#article","isPartOf":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/"},"author":{"name":"christianhartselle","@id":"https:\/\/people.bsu.edu\/econbriefs\/#\/schema\/person\/53f4e0b981fd42f34cbb306b9ad62622"},"headline":"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz","datePublished":"2025-05-06T14:32:19+00:00","mainEntityOfPage":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/"},"wordCount":427,"commentCount":0,"keywords":["bond","common stock","economist","equities","equity","financial advisor","indexed mutual fund","individual portfolio","investment","investor","James Choi","Journal of Economic Perspectives","management fees","market","mutual fund","personal finance","portfolio","retirement income","wealth","Yale"],"articleSection":["Investment"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/","url":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/","name":"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs","isPartOf":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/#website"},"datePublished":"2025-05-06T14:32:19+00:00","author":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/#\/schema\/person\/53f4e0b981fd42f34cbb306b9ad62622"},"breadcrumb":{"@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/people.bsu.edu\/econbriefs\/2025\/05\/06\/should-you-follow-an-economists-financial-advice-by-dr-cecil-bohanon-and-dr-john-horowitz\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/people.bsu.edu\/econbriefs\/"},{"@type":"ListItem","position":2,"name":"Should You Follow an Economist\u2019s Financial Advice? \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"}]},{"@type":"WebSite","@id":"https:\/\/people.bsu.edu\/econbriefs\/#website","url":"https:\/\/people.bsu.edu\/econbriefs\/","name":"Econ Briefs","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/people.bsu.edu\/econbriefs\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/people.bsu.edu\/econbriefs\/#\/schema\/person\/53f4e0b981fd42f34cbb306b9ad62622","name":"christianhartselle","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/99dffdd2c9bd490eefa22ed0b6d8d8a277b0368e88948df516427d91d6bf8ea5?s=96&d=mm&r=g","caption":"christianhartselle"},"url":"https:\/\/people.bsu.edu\/econbriefs\/author\/christianhartselle\/"}]}},"_links":{"self":[{"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/posts\/54","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/users\/112"}],"replies":[{"embeddable":true,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/comments?post=54"}],"version-history":[{"count":0,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/posts\/54\/revisions"}],"wp:attachment":[{"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/media?parent=54"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/categories?post=54"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/people.bsu.edu\/econbriefs\/wp-json\/wp\/v2\/tags?post=54"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}