Which do you believe are more common in English:  words ending in “-ing” or words in which the next-to-last letter is “n”?   How about words beginning with the letter “r” or words in which the letter “r” is the third letter?  If you are like most people,  you responded that “-ing” words and those that begin with “r” are more common—although the other answer is correct for both questions.  Scientists who study behavior, particularly decision making, propose that people systematically and consistently tend to answer these types of questions incorrectly because they are relying on a mental shortcut called “availability.”  That is, since it is easier for people to recall words that end in “-ing” or begin with “r,” they erroneously conclude that such words are more common than words in which “n” is the second to last letter  or words in which the third letter is “r.”   Difficult probabilistic questions like these are so taxing that human minds develop short cuts—or “heuristics”—to ease the task.  These shortcuts are fine when the questions are relatively inconsequential.  But these shortcuts raise cause for concern with weightier questions.

Take for example the following:  Do you believe that you are more or less likely than the average person to be victimized by crime, stricken with a serious disease, involuntarily unemployed, or injured in a car accident?  In behavioral experiments, more people than is logically possible generally suggest that they are less likely than average to suffer from such negative events.   Behavioral scientists ascribe this systematic underestimation of the probability of negative events to self-serving biases of overconfidence present in most individuals.  These and many other behavioral findings underlie a modified form of economic analysis of law called “behavioral economics.”  This new analytical approach holds exciting predictive and prescriptive potential in a wide range of areas, particularly in fields involving economic risk analysis and behavior modification—such as consumer debt and bankruptcy.

A consensus seems to be developing among societies in Western Europe and the United States—among others—on the desirability of consumer credit and the resulting necessity of treating the social ills associated with excessive consumer debt.  More and more, consumer credit has come to be regarded positively, as empowering consumers to make better lives for themselves by leveraging future earning potential.  If consumer credit is no longer to be restricted, it is not possible to eliminate overindebtedness and the social problems it causes.  Consumers find themselves financially overextended both as a result of their own poor planning and as a result of external factors, such as job loss, medical problems, and divorce.  Thus, more and more countries seem to have agreed on the general notion that “overindebtedness” should be prevented to the extent possible, but it should be treated if not prevented.    

Western society seems largely to have abandoned ex ante restriction of the supply of consumer credit in favor of ex post treatment of the problems of overindebtedness through legal consumer debt relief.