Bob Lawless’ recent query How Dum Do They Think I Am? (sic) immediately caught my attention.  I was shocked at Bob’s opening himself up to the obvious comeback from his smart-aleck friends by posing that question. But the other reason his question resonated with me was a full-page Wall Street Journal advertisement that I had just seen made a different assertion about consumers and their use of credit. In huge letters, the ad states "People are smart." It goes on to claim that "[t]his isn’t an opinion. It’s a fact." The advertiser is Ditech, which is the home financing arm of GMAC. Ditech is telling consumers that people "know what’s best for them and their family. And they know if we offer competitive home mortgages and smart financial solutions, together, we can make the most of our smart."

The psychology of this ad seems to be to allay doubt in a customer’s mind about whether a home equity loan is a good idea and confirm that people should trust their financial instincts. This perspective is counter to the insights of behavioral law and economics scholars. Their research shows that people often make mistakes in decision making, and that "smart" doesn’t prevent this type of error. I was also struck by the anti-paternalism agenda of this ad. It strikes a libertarian cord, encouraging consumers to do what they want and trust that it will all work out. Of course, many experts disagree, as this interview done as part of a Bankrate financial literacy series for consumers explains. My final thinking on the ad is to wonder how financial educators would respond to this assertion. I don’t doubt anyone’s "smarts" but the research that I’ve seen reflects a strong belief by consumers that they need more financial education, that they are frequently worried that they do not understand lending products, and that they feel stressed and unsettled about financial issues. Suggesting, as the ad does, that because people know "it’s not a good idea to stick a fork in a light socket," they can navigate the American credit economy seems to underrate the complexity of the home economics facing today’s families.