[authors: Barbara S. Mishkin, Mark J. Furletti]

The first meeting of the CFPB’s new Academic Research Council, which was held on July 27, 2012, was not open to the public. In an article about the CFPB’s mortgage disclosure proposals that appeared in the New York Times on August 18, 2012, University of Chicago Professor and Council appointee Richard Thaler noted that he had met with CFPB staff members “last month” to discuss from a behavioral science perspective the CFPB’s proposal to integrate TILA and RESPA disclosures. That statement led us to speculate whether the meeting to which Professor Thaler referred was, in fact, the Council’s first meeting.

In his recent post, Alan Kaplinsky observed that, given the CFPB was not required or authorized by Dodd-Frank to create the Council, it’s important for future Council meetings to be open to the public. We also think it’s important that other Council members follow Professor Thaler’s lead and be willing to publicly share information about their discussions with the CFPB so that industry members and consumers alike can be informed about and have an opportunity to comment on the ideas Council members bring to the CFPB.

Professor Thaler is one of the founding fathers of behavioral economics, an economic theory that is playing a central role in the CFPB’s regulatory and enforcement agenda. The CFPB has generally been hiring behavioral economists in contrast to the Federal Reserve, which has predominantly employed neo-classical economists.  Behavioral economists posit that consumers are not rational decision makers and instead have certain frailties or weaknesses that lead them to make decisions that they would later recognize as not in their own best interest. (How behavioral economics differs from traditional economics is the subject of an article co-authored by Professor Thaler.)