In this brief history of U.S. consumer finance since World War II, the sector is defined based on the functions delivered by firms in the form of payments, savings and investing, borrowing, managing risk, and providing advice. Evidence of major trends in consumption, savings, and borrowing is drawn from time-series studies. An examination of consumer decisions, changes in regulation, and business practices identifies four major themes that characterized the consumer finance sector: innovation that increased the choices available to consumers; enhanced access in the form of consumers' broadening participation in financial activities; do-it-yourself consumer finance, which both allowed and forced consumers to take greater responsibility for their own financial lives; and a resultant increase in household risk taking.
ANDREA RYAN holds a PhD in sociology and conducts research on urban studies, social inequality, and race and ethnicity. She was a research associate at Harvard Business School from 2008 to 2010 and now works in the nonprofit sector.
GUNNAR TRUMBULL is associate professor of business administration at Harvard Business School, where he conducts research on consumer politics in the United States and Europe. He is the author of Consumer Capitalism: Politics, Product Markets and Firm Strategy in France and Germany, and of a forthcoming book on consumer credit in the United States and France.
PETER TUFANO is Peter Moores Dean and professor of finance at Saïd Business School, University of Oxford. He was the Sylvan C. Coleman Professor of Financial Management at Harvard Business School. His recent research and teaching focus on consumer finance issues. He is co-organizer of the Household Finance working group at the National Bureau of Economic Research, coeditor of the Social Science Research Network's Household Finance, and founder and chairman of the Doorways to Dreams Fund, a non-profit organization that develops new financial products to serve the needs of low- to moderate-income households.