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This study examines the effect of credit-based insurance scores on the price and availability of automobile insurance and the impact of such scores on racial and ethnic minority groups and on low-income groups. Using a large database of insurance policies, the study shows that scores are effective predictors of risk under automobile policies. At the same time, scores are observed to be distributed differently among racial and ethnic groups, and this difference is likely to have an effect on the insurance premiums that these groups pay, on average. Nonetheless, scores appear to derive a relatively small amount of their predictive power from their correlation with race and ethnicity. Finally, the Commission could not develop an alternative scoring model that would continue to predict risk effectively, yet decrease the differences in scores among racial and ethnic groups.

This study used the 1992–2006 waves of the Health and Retirement Study (HRS) to investigate changes in risk tolerance levels over time in response to stock market returns. Findings indicate that risk tolerance tends to increase when market returns increase and decrease when market returns decrease. Individuals who change their risk tolerance in this manner are likely to invest in stocks when prices are high and sell when prices are low. Researchers, employers, financial educators and practitioners should help investors overcome the bias of overweighting recent news of market performance.

This report presents the results of a study that uses a controlled experiment with over 500 recent mortgage customers to examine the mortgage broker compensation disclosure proposed by the Department of Housing and Urban Development (HUD) as part of its July 2002 RESPA reform proposal. The focus of the disclosure is on any “yield spread premium” paid by the lender to the broker for loans originated with “above par” interest rates. The study finds that the disclosure is likely to confuse consumers, cause a significant proportion to choose loans that are more expensive than the available alternatives, and create a substantial consumer bias against broker loans, even when the broker loans cost the same or less than direct lender loans. The report concludes that a better way to help consumers obtain less expensive mortgages would be to encourage and facilitate consumer comparison shopping on loan costs.

This study reports the results of the Federal Trade Commission’s second statistical survey of fraud in the United States.