a behavioural economics perspective
Australia’s bankruptcy orpersonal insolvency system is commonly described as a ‘fresh start’ system,where one objective of bankruptcy law and policy is to provide debtors with afresh start after they have been discharged from bankruptcy. However thepermanent availability of personal insolvency information to the public is anaspect of the Australian system that may hinder the achievement ofrehabilitation focused fresh start. In 2016, the Australian government isconsulting on a proposal to reduce the default period for bankruptcy from 3years to 1 year. At the same time it is proposing to retain the permanent recordof bankruptcy in the National Personal Insolvency Index and is seeking thepublic’s views on whether it is appropriate to reduce the retention period forpersonal insolvency information in credit reports.
We study the effect of theavailability of bankruptcy records, compared to their non-existence, in aneconomic experiment, thus we use the methods of experimental economics toprovide evidence for the outlined research question in law. The experimentsallow us to identify the effect that the exposure of such a history has oninvestor as well as debtor behavior. Our exploratory research provides firstevidence showing that bankruptcy records in the experiment increase investmentand honest behaviour by debtors as long as no bankruptcy case is recorded. If,however, an actor failed to return payments in the past and this case isrecorded, a downward spiral occurs.
Professor Uwe Dulleck is one ofAustralia’s leading applied researchers in Behavioural Economics, besidesauthoring academic articles in the top international and Australian economicjournals, including the American Economic Review, the Journal of EconomicLiterature, the Economic Journal and the Journal of Public Economics, he wroteBehavioural Economic reports for the Australian Tax Office, the AustralianSecurities and Investments Commission (ASIC), the Commonwealth and theVictorian Departments of Education. He is currently working with the Non-ProfitFormer Origin Greats to Increase attendance and performance of Aboriginal andTorres Strait Islander students at school.
Within the field of Behavioural Economics his workfocusses on the area of behavioural change in education as well as the role ofregulation and disclosure in the context of financial decision making. Besideshis affiliation with QUT, Uwe is Honorary Professor of BehaviouralEconomics and ANU’s Crawford School of Public Policy and Fellow of CESifo atthe University of Munich.
Uwe was the founder of the QueenslandBehavioural Economics Group (QuBE) and the Spring Meeting of Young Economistsin Europe.