Presidential Address: Human Finance: Incorporating Insights from the Life Sciences

Many of the key determinants of human behavior identified in the life sciences, such as stress response, impulse control, and mood regulation, remain absent from standard economic and finance models. This paper illustrates how such insights can enhance economic models in the context of inflation expectations. Combining a retrospective survey that elicits personal inflation histories with an experimental intervention that induces the reexperiencing of historic inflation, I show that physiological, emotional, and cognitive stress markers predict heightened inflation expectations and sharper memory recall, while also shaping personal economic narratives. These findings suggest novel policy tools to counter the persistent scars of economic distress and crisis experiences, for example, by designing experiences to provide predictability and control.