The Data Behind Financial Choices

Financial institutions are constantly using more personal and detailed data to tailor products to their customers. Personalized offerings can be in the interest of consumers, notes Antoinette Schoar, Michael M. Koerner Professor of Entrepreneurial Finance. But they can also put consumers at a disadvantage—for example, if companies offer less competitive terms to those they discern are financially less sophisticated, it can lead to regressive outcomes for poorer or less educated consumers. Analyzing how big data and consumer behavior affect consumer finance is a main thread of Schoar’s research, which also spans entrepreneurial finance and finance in emerging markets. She is also a cofounder of the nonprofit ideas42, a research lab on behavioral social science. “The reputation of MIT makes it easier to actually be heard by policy makers and decision makers in the financial world,” Schoar says. “I do a lot of field work, and it’s much easier to get your foot in the door if you say you’re an MIT professor.”