Government is overestimating financial resilience of citizens

Problem debts arise in part because the government is too optimistic about the financial resilience of citizens. This is one of the findings in the WRR Investigation ‘Own fault? A behavioural science perspective on problem debts’ (Eigen schuld? Een gedragswetenschappelijk perspectief op problematische schulden) which was presented on 30 June and in which the WRR formulates recommendations for policy that is more in tune with the actual choices made by citizens.

Financial resilience

The Dutch government is too optimistic regarding the financial resilience of citizens. Many people find the rules too complex, and too little account is taken of human psychology. The unintended consequence is that debtors are sometimes forced to get into even more debt.

 

The number of households in the Netherlands that are no longer reasonably able to pay off their debts has risen to well over half a million in recent years. The Investigation examines the role played by individual mental characteristics and capabilities in this situation.

Prior to publication the WRR, the National Ombudsman and the Netherlands Court of Audit gave a joint (closed) briefing to the Parliamentary Committee on Social Affairs and Employment on providing help for people with problem debts.

About the Investigation

The Investigation was written by Dr Will Tiemeijer, a researcher at the WRR, as part of the Social divisions (Maatschappelijke Scheidslijnen) project, in which Professor Mark Bovens, Anne-Greet Keizer and Vivian van Wingerden are also taking part. A background study has been published as Working Paper 23 ‘Sustainable improvement in healthy financial behaviour. Dream or reality?’(Duurzame verbetering van gezond financieel gedrag. Droom of werkelijkheid?), by Dr Nadja Jungmann and Dr Tamara Madern.