University of Southern California

What Motivates Our Financial Behavior?
March 19, 2012 • by Fernando Zapatero

Today I will have the privilege of being installed as the inaugural holder of the Robert G. Kirby Chair in Behavioral Finance. Often times a university appoints a scholar to a chair at the peak of his or her career, honoring past accomplishments. I look at my appointment a bit differently: this mark of distinction means that now I have to prove that I deserve the chair; I have to work harder, think deeper, find a way to exceed the expectations of the administrators who trusted me with the position, and of the donors who generously endowed it.

The Kirby Chair sponsors an area of research that I’ve been passionate about from the time I was a young student in Madrid. I’m endlessly fascinated by the psychology of cognition, how we process information, and all the elements that motivate us as human beings.

So what exactly do we mean by the field of “behavioral finance?” A good example is the paper I wrote last year with Joshua Shemesh, then a Ph.D candidate at Marshall and now on the University of Melbourne faculty: “Thou Shalt Not Covet Thy (Suburban) Neighbor’s Car.” We studied the effect of population density on the intensity of certain types of behavior. We discovered that the decision to buy a car - especially luxury cars that signal status - is strongly influenced by the previous car purchases of neighbors, and the effect is more intense in small towns. In other words, if you are from a small community and know your neighbors, you are more likely to be caught up in the phenomenon of “keeping up with the Joneses” than your big city counterparts.

Behavioral finance examines what makes people do what they do regarding finance. Sharing my voice prompted me to ask the question: what motivates those of us who support Marshall, such as the individuals and organizations who unselfishly funded the Kirby Chair? I believe people like to have an impact. They like to change the world. The Kirby Chair honors the life work of Mr. Robert G. Kirby, who was the chairman emeritus of the Capital Guardian Trust Company, and a powerhouse in the financial community. He helped change the world.

Join me in making an impact by supporting Marshall. Together, our behavior will make the world a better place.

Fight On!

Fernando Zapatero
Robert G. Kirby Chair in Behavioral Finance