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People don’t make economic decisions based solely on logic.

Core to behavioral economics (BE) theory is the “radical” notion that people don’t make economic decisions based solely on logic. BE relies on psychological insights into human behavior to help explain economic decision-making. For example, year in and year out credit unions provide better loan and deposit rates to consumers. Classical economic theory predicts that consumers would choose credit unions over banks for all types of consumer finance products, but we know from market share data there is something besides pricing driving consumer decision-making.

BE is a powerful tool to help credit unions make decisions that benefit their members, communities and, by proxy, their cooperative. The NCUA’s decision to approve a distribution in the form of a dividend of $735.7 million provides a unique opportunity for credit union leaders to advantageously apply BE principles with this windfall.

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