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Education

Can Security Design Foster Household Risk-Taking?

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Claire Celerier shows that securities with nonlinear payoff designs can foster household risk-taking.

Image courtesy of interviewee. February 6, 2024

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This video video discusses the concept of "total products," a type of financial instrument characterized by a fixed maturity and linked to underlying assets such as funds, stocks, or indices. These products offer capital guarantees and potential participation in the performance of these assets, mainly focusing on their appeal to investors. Despite their complexity, there is a notable market for these capital guarantee products, particularly in light of low stock market participation in various countries, including Europe, where only a small percentage of financial wealth is invested in stocks.

The analysis poses important questions about why these products attract investment and whether they can encourage greater participation in stock markets, especially among households that are hesitant to invest. It notes the potential benefits of engaging with the stock market, which includes accessing risk premiums and gaining additional wealth.

The study highlights a gap in the existing literature regarding security design's role in influencing household financial decisions. Previous research has examined aspects like education and default options, but the effectiveness of these methods in driving stock market engagement is questioned. By focusing on security design, the study aims to explore how financial products can be crafted to mitigate household biases and promote investment.

Through analysis of data from Sweden between 2002 and 2007, the study finds that households investing in these total products tended to have increased stock market participation, particularly those who were initially reluctant to invest. The methodology used considers the effects of the supply of total products being offered by banks, circumventing potential reverse causation.

Finally, the study suggests the increased demand for these products may be linked to non-standard utility functions reflecting households' anxieties about market downturns. It emphasizes the importance of product pricing and transparency concerning bank markups, recommending that ensuring fair pricing can enhance the welfare benefits for households. The findings imply that thoughtful financial product design can increase household participation in financial markets and improve overall financial well-being.

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X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

00:00.025 --> 00:02.285
We have like this big market of total products,

00:02.285 --> 00:04.805
which is a several trillion dollar market.

00:05.945 --> 00:08.285
And, so what are total products?

00:08.585 --> 00:12.005
So total products are products with a fixed maturity

00:12.745 --> 00:15.725
and an underlying asset, which is a fund, a single stock

00:16.585 --> 00:18.525
or a basket of stock, or an index

00:20.425 --> 00:23.925
and, nonlinear design, which means that the return

00:24.535 --> 00:29.445
after, like at maturity, which can be 1, 2, 3, 4, 5 years

00:30.355 --> 00:33.045
depends on the performance of the underlying asset.

00:33.045 --> 00:34.525
And it's a nonlinear function.

00:35.965 --> 00:39.465
So, which means that, the, for example,

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the products we're looking at are guaranteed products.

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And so for these products,

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the investors get a capital guarantee,

00:49.785 --> 00:52.725
and then they participate in the performance of,

00:52.725 --> 00:54.525
the underlying asset, which means

00:54.525 --> 00:57.805
that is the underlying asset performs, badly

00:57.985 --> 00:59.805
during the maturity period.

01:00.385 --> 01:02.605
The, the, the capital is protected,

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and they do participate only in the positive performance

01:05.605 --> 01:06.605
of the underlying assets.

01:07.425 --> 01:09.885
So we have this large market of startup products.

01:09.885 --> 01:14.285
So one question is why we have these, products

01:14.285 --> 01:17.805
with a relatively complex design on why do investors invest

01:17.805 --> 01:20.205
in these products beyond this market?

01:20.385 --> 01:22.205
We have a lot of sort pension product

01:22.345 --> 01:23.845
and so on with a capital guarantee.

01:24.765 --> 01:28.095
Okay? So we want to understand why, investors invest

01:28.115 --> 01:30.735
so much in, in, in, in capital guarantee products.

01:31.755 --> 01:34.535
Um, and at the same time we have another paradox,

01:34.535 --> 01:37.775
which is a relatively low stock market participation

01:38.515 --> 01:42.095
in many countries, even among households

01:42.125 --> 01:43.735
with a significant amount of wealth.

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So for example, in Europe, only 8%

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of financial wealth is invested in, in stock on average,

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like in 2000 and and 15.

01:54.355 --> 01:57.255
And if we look individually individuals,

01:57.385 --> 01:59.895
above 50-year-old, only 30%

01:59.895 --> 02:01.615
of them investing in the stock markets.

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So we are trying to see whether

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or not capital guarantee products can be announced were

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to this low stock market participation.

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And why? It's an important question.

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It's because by not participating in stock markets,

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household forgo an important possible source of income,

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which is, the risk premium.

02:20.485 --> 02:25.465
So what we're doing is ing on this capital guarantee

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foster, risk taking

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or stock market participation for households

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who are something not really willing in, in stock markets.

02:34.605 --> 02:36.865
So there, there are several puzzles in,

02:36.865 --> 02:38.185
in household finance.

02:38.325 --> 02:41.145
So the one we address is the low stock market participation.

02:41.605 --> 02:43.905
So it's been a while that people have thought about how

02:43.905 --> 02:45.865
to make people participate more in stock markets,

02:46.605 --> 02:49.065
and it's not that easy to, to find the solution.

02:49.145 --> 02:51.665
So the literature has looked at the role of education,

02:52.675 --> 02:56.005
financial literacy, and the role of default, default option.

02:56.515 --> 02:58.765
Like for example, you have to save for

02:58.805 --> 03:01.765
Retirement, and the default option includes equity.

03:02.195 --> 03:04.845
Okay? To which extent financial advisors can encourage

03:04.845 --> 03:06.765
households to participate more in, in stock markets.

03:07.825 --> 03:12.285
Uh, but, so these studies a bit struggled

03:12.285 --> 03:14.005
to find a real effect,

03:14.665 --> 03:16.645
or if they find an effect, it's not always

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to the benefit of the household.

03:18.275 --> 03:19.925
Like we know that indeed,

03:19.925 --> 03:21.885
households do follow financial advisors.

03:21.955 --> 03:23.445
They might push them to invest more,

03:23.945 --> 03:26.085
but sometimes it could be excessively staking

03:26.185 --> 03:27.445
or under diversification

03:27.505 --> 03:30.325
or in products where the financial advisor can can

03:30.465 --> 03:32.085
cap, went.

03:32.745 --> 03:36.925
So we look at a new channel, which is, security design.

03:37.705 --> 03:39.085
And so the literature on the,

03:39.085 --> 03:42.125
on security design on the household financial decision is,

03:42.125 --> 03:43.845
is relatively small.

03:44.545 --> 03:48.725
Uh, so, I have, we have worked already on this question

03:48.755 --> 03:50.165
with Michael th Boris Vale.

03:50.945 --> 03:53.405
And so we show that, okay,

03:53.645 --> 03:56.445
security design is a financial innovation,

03:56.545 --> 03:58.045
and as always, it can,

03:58.065 --> 03:59.965
new innovation can be good or bad.

04:00.265 --> 04:01.685
And so our first,

04:01.685 --> 04:04.845
study was looking more at the dark side of,

04:05.125 --> 04:08.205
security design showing that in fact,

04:08.295 --> 04:11.365
banks design also securities that, when,

04:11.365 --> 04:14.845
when household are reaching for yield, so they look

04:15.265 --> 04:16.525
for higher returns.

04:16.905 --> 04:19.645
So they design security where the risk is hidden

04:19.905 --> 04:23.965
to offer even higher returns at the expense of households.

04:24.515 --> 04:26.085
Okay? So that will be the dark side

04:26.085 --> 04:27.485
of the literature on security design.

04:27.905 --> 04:31.285
Now we are documenting the white side showing that in fact,

04:31.585 --> 04:36.405
in some cases, banks can also design securities

04:36.405 --> 04:40.605
that address some behavioral biases for better to encourage,

04:40.945 --> 04:44.445
risk taking, which is an issue where it's not that easy

04:44.465 --> 04:47.965
to find the solution, to have the opportunity to

04:48.515 --> 04:50.965
exploit, very unique data.

04:51.105 --> 04:55.205
So because we are using data from Sweden,

04:55.265 --> 04:57.685
and we are using individual level data,

04:58.575 --> 05:01.035
and so, which means that for each individual in Sweden

05:01.705 --> 05:06.275
from 2002 to 2007, we observe many characteristics

05:07.255 --> 05:10.065
including the exact portfolio composition,

05:11.085 --> 05:13.945
but also characteristics on, on demographics

05:14.925 --> 05:16.665
and, and income.

05:17.625 --> 05:19.005
So these are fiscal data.

05:19.105 --> 05:20.365
If you're wondering where this data

05:20.365 --> 05:21.645
comes from, these are fiscal data.

05:22.305 --> 05:25.905
Um, and so we have the composition at,

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at the exact financial, like at the level, individual level

05:30.785 --> 05:32.265
of the, of the financial product,

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which is, which is really unique.

05:33.925 --> 05:37.185
And at the same time, we have data on all the strat

05:37.185 --> 05:38.745
of products that have been issued in Sweden.

05:39.525 --> 05:42.745
And so we can merge the two data sets to identify exactly

05:43.525 --> 05:46.185
who has invested in these strat of products.

05:46.485 --> 05:48.505
And because also we have like demographics

05:48.725 --> 05:51.105
and other characteristics, we can try to get a sense

05:51.105 --> 05:53.145
of why they have invested in these products.

05:54.365 --> 05:56.745
And so what, what, we observed, so we,

05:56.745 --> 05:58.285
we are are also like in terms of time period,

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we have this data for 2002 to 2007, which is,

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the period when these products are introduced in Sweden.

06:06.875 --> 06:08.095
So this is really like,

06:08.115 --> 06:10.295
but at the end of the period, 15%

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of households have invested in this products.

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So they have been massively adopted in, in,

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in Sweden because within five years we have 15%

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of households investing in these products.

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And so we, we, we can, observe exactly

06:24.435 --> 06:25.695
who invested in these products.

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And because we have the entire portfolio composition,

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we can see, the impact on,

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household overall stock market participation.

06:34.405 --> 06:37.975
Like what is their exposure to, stock markets

06:38.345 --> 06:40.455
after they invested in these products

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and how it is increasing

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because these products, the underlying asset is in equity,

06:45.865 --> 06:47.285
as I said, and it's a way

06:47.285 --> 06:48.485
to participate in the positive

06:48.485 --> 06:49.565
performance of the stock market.

06:50.625 --> 06:55.165
And so what we observe, so we observed that those households

06:55.185 --> 06:57.285
who did invest in these products,

06:57.335 --> 07:01.325
their stock market participation increased more during

07:03.125 --> 07:04.395
other households.

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And it's even more so the case for those

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who are very reluctant to participate in stock markets.

07:09.075 --> 07:11.115
Exactly. So we can observe

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what were the stock market participation at the very

07:13.755 --> 07:16.755
beginning of the period, and we will find a big effect on

07:16.755 --> 07:18.995
these households who had a very small stock

07:18.995 --> 07:20.155
market participation example.

07:22.025 --> 07:24.685
So if you want to know more about the methodology,

07:24.865 --> 07:28.165
one big challenge here is that, we cannot sell, like

07:28.165 --> 07:30.285
what the results I gave you are just correlation.

07:30.745 --> 07:33.645
We find that those who participate more in t share,

07:33.905 --> 07:37.365
but there is a risk of reverse causality or simultaneity.

07:37.545 --> 07:39.845
So maybe, maybe these products

07:39.845 --> 07:41.965
because they wanted to participate more in stock markets.

07:42.745 --> 07:45.765
So to address this issue, we use exogenous shock

07:45.985 --> 07:47.365
to the supply of these products.

07:48.065 --> 07:51.485
So what we have is that we have the bank of each household,

07:51.715 --> 07:54.445
like in which banks are, investing ante.

07:54.945 --> 07:56.765
And so in, and so we know

07:56.765 --> 07:59.045
that not all banks are offering these products

07:59.045 --> 08:00.045
and not at the same time.

08:00.945 --> 08:05.085
So we can, we can build the measure of supply,

08:05.085 --> 08:07.885
from banks that is not related to household characteristics.

08:08.465 --> 08:10.285
And we show that it does explain indeed

08:10.285 --> 08:11.525
the participation in these products.

08:11.915 --> 08:14.685
It's also because like the relationship between household

08:14.745 --> 08:17.685
and banks is so sticky that they will,

08:17.715 --> 08:19.405
they will consider the products that are offered

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by their banks, first.

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And, and so we, so we do observe that

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what the bank offers does affect how people invest houses

08:29.145 --> 08:30.565
who are offers for products.

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They are like more likely to invest in these products

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and it makes them participate more in, in stock markets

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even more so if they were very reluctant to do so.

08:38.245 --> 08:41.245
Uh, initially we do find an increase in stock market

08:41.645 --> 08:45.205
participation, even more so for houses who are not,

08:45.565 --> 08:48.525
participating in stock, of almost not participating in in

08:48.525 --> 08:50.925
stock markets, initially.

08:51.385 --> 08:55.285
So what it implies is, that they do benefit more from,

08:55.285 --> 08:57.285
from the risk premium, but whether

08:57.385 --> 09:00.485
or not it increases welfare, this is another question.

09:00.985 --> 09:04.485
So to address this question, we use a theoretical model,

09:04.485 --> 09:06.365
because we want to estimate the impact on the

09:06.365 --> 09:08.085
utility of households.

09:08.625 --> 09:13.285
So we did, an economic model where we make,

09:13.285 --> 09:15.885
assumption about the utility function of household,

09:16.625 --> 09:18.325
and we try to figure out which kind

09:18.325 --> 09:22.285
of utility function can explain their demand, these products

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and what we can infer in terms of welfare.

09:25.025 --> 09:27.245
So first we find that, you need,

09:27.245 --> 09:29.765
you need a non-standard utility function to to account

09:29.765 --> 09:31.005
for the demand for these products.

09:31.425 --> 09:33.645
Uh, so you need houses that put a lot

09:33.645 --> 09:35.525
of weight on the negative part of the stock market.

09:35.825 --> 09:38.765
So it means you, you, you need less aversion

09:38.905 --> 09:40.725
of very pessimistic, beliefs.

09:41.705 --> 09:45.485
And so then, if you, if you take into account these,

09:46.025 --> 09:49.085
type of utility functions, which are in fact relatively,

09:49.665 --> 09:53.565
like there is a large literature showing

09:53.595 --> 09:56.205
that indeed it's likely that there is less aversion

09:56.205 --> 09:58.965
and there there is pessimistic belief,

09:59.155 --> 10:01.405
then you can account for the demand for these products.

10:01.825 --> 10:05.205
And also you, it can increase potentially, welfare

10:05.945 --> 10:08.365
by improving stock market participation.

10:09.465 --> 10:14.435
So benefit from, higher, income from the stock,

10:14.615 --> 10:16.315
market, or an increased wealth

10:16.375 --> 10:18.115
and an increased, consumption.

10:18.975 --> 10:23.555
Um, the assumption here is that,

10:24.005 --> 10:28.795
these products are fairly priced a risk with,

10:28.805 --> 10:30.075
innovative products.

10:30.135 --> 10:32.755
Is that because there's a lot of information at asymmetries

10:32.755 --> 10:34.915
because the market might not be perfectly competitive,

10:35.445 --> 10:37.515
banks are able to extract rent.

10:38.255 --> 10:42.235
So the question is at how these products are priced.

10:43.175 --> 10:46.795
So in the beginning of the 2000 in Sweden during our,

10:47.375 --> 10:50.155
during our observation period where we have the data,

10:50.895 --> 10:52.795
in fact, these products were fairly priced,

10:52.815 --> 10:55.035
but it's still beneficial to, to households.

10:55.055 --> 10:58.075
So we're talking about a 2% markup,

10:58.135 --> 10:59.195
for banks on average.

11:00.525 --> 11:01.905
So this is a clear condition.

11:02.325 --> 11:06.085
So to conclude, if these products are fairly priced,

11:06.515 --> 11:07.605
they can increase welfare.

11:08.265 --> 11:12.085
But one has to be aware that with non in air products,

11:12.275 --> 11:16.005
it's very likely to obfuscate, households

11:16.465 --> 11:18.925
and potentially to, to hide once.

11:19.225 --> 11:20.325
So it might be the case

11:20.325 --> 11:22.685
that banks could offer these products

11:22.685 --> 11:26.045
that are very attractive for, for loss adverse households

11:26.045 --> 11:28.205
or PE households with pessimistic beliefs

11:28.625 --> 11:30.605
and charge excessively for these products

11:31.055 --> 11:33.125
where banks offer these kind of products.

11:33.145 --> 11:36.725
But with three, 4% markups in this case,

11:36.915 --> 11:39.925
like the welfare gains, decrease

11:40.025 --> 11:42.845
and the benefits, for households might,

11:42.925 --> 11:47.085
might just disappear with our welfare analysis.

11:48.145 --> 11:51.805
We want to show also that, it depends also on

11:51.825 --> 11:52.845
how these products are

11:52.885 --> 11:53.885
Priced. And so

11:53.885 --> 11:56.245
from the perspective of reor, it's important

11:56.785 --> 11:59.205
to get a sense of the pricing of the products.

11:59.205 --> 12:00.765
What are the markups for banks?

12:01.425 --> 12:04.955
Uh, potentially it's, if you think about policy implication,

12:05.135 --> 12:07.595
one of them could be to disclose,

12:08.815 --> 12:11.905
to be transparent about markups, to make sure

12:11.905 --> 12:15.225
that the market is, as competitive as possible

12:15.285 --> 12:19.065
to make sure that these products do benefit, households.

12:19.605 --> 12:22.265
And more generally, like you could think of,

12:22.425 --> 12:25.545
applications for these, products, if you think about,

12:25.845 --> 12:27.305
saving for retirement.

12:28.245 --> 12:31.265
Um, so are, are even, we could be more creative.

12:31.415 --> 12:34.505
Like the, the, what it suggests is that the design

12:34.505 --> 12:36.905
of security products could be used in different situations

12:36.905 --> 12:41.425
depending on what we would expect people to do, in a way

12:41.425 --> 12:44.425
that could increase their, their, their utility.

00:00 - We have like this big market of total products, which is a several trillion dollar market. And, so what are total products? So total products are products with a fixed maturity and an underlying asset, which is a fund, a single stock or a basket of stock, or an index

00:20 - and, nonlinear design, which means that the return after, like at maturity, which can be 1, 2, 3, 4, 5 years depends on the performance of the underlying asset. And it's a nonlinear function. So, which means that, the, for example, the products we're looking at are guaranteed products. And so for these products, the investors get a capital guarantee, and then they participate in the performance of, the underlying asset, which means

00:54 - that is the underlying asset performs, badly during the maturity period. The, the, the capital is protected, and they do participate only in the positive performance of the underlying assets. So we have this large market of startup products. So one question is why we have these, products with a relatively complex design on why do investors invest in these products beyond this market? We have a lot of sort pension product

01:22 - and so on with a capital guarantee. Okay? So we want to understand why, investors invest so much in, in, in, in capital guarantee products. and at the same time we have another paradox, which is a relatively low stock market participation in many countries, even among households with a significant amount of wealth. So for example, in Europe, only 8% of financial wealth is invested in, in stock on average, like in 2000 and and 15.

01:54 - And if we look individually individuals, above 50-year-old, only 30% of them investing in the stock markets. So we are trying to see whether or not capital guarantee products can be announced were to this low stock market participation. And why? It's an important question. It's because by not participating in stock markets, household forgo an important possible source of income, which is, the risk premium.

02:20 - So what we're doing is ing on this capital guarantee foster, risk taking or stock market participation for households who are something not really willing in, in stock markets. So there, there are several puzzles in, in household finance. So the one we address is the low stock market participation. So it's been a while that people have thought about how to make people participate more in stock markets, and it's not that easy to, to find the solution.

02:49 - So the literature has looked at the role of education, financial literacy, and the role of default, default option. Like for example, you have to save for Retirement, and the default option includes equity. Okay? To which extent financial advisors can encourage households to participate more in, in stock markets. but, so these studies a bit struggled to find a real effect, or if they find an effect, it's not always to the benefit of the household.

03:18 - Like we know that indeed, households do follow financial advisors. They might push them to invest more, but sometimes it could be excessively staking or under diversification or in products where the financial advisor can can cap, went. So we look at a new channel, which is, security design. And so the literature on the, on security design on the household financial decision is,

03:42 - is relatively small. so, I have, we have worked already on this question with Michael th Boris Vale. And so we show that, okay, security design is a financial innovation, and as always, it can, new innovation can be good or bad. And so our first, study was looking more at the dark side of, security design showing that in fact,

04:08 - banks design also securities that, when, when household are reaching for yield, so they look for higher returns. So they design security where the risk is hidden to offer even higher returns at the expense of households. Okay? So that will be the dark side of the literature on security design. Now we are documenting the white side showing that in fact, in some cases, banks can also design securities that address some behavioral biases for better to encourage,

04:40 - risk taking, which is an issue where it's not that easy to find the solution, to have the opportunity to exploit, very unique data. So because we are using data from Sweden, and we are using individual level data, and so, which means that for each individual in Sweden from 2002 to 2007, we observe many characteristics including the exact portfolio composition, but also characteristics on, on demographics and, and income.

05:17 - So these are fiscal data. If you're wondering where this data comes from, these are fiscal data. and so we have the composition at, at the exact financial, like at the level, individual level of the, of the financial product, which is, which is really unique. And at the same time, we have data on all the strat of products that have been issued in Sweden. And so we can merge the two data sets to identify exactly

05:43 - who has invested in these strat of products. And because also we have like demographics and other characteristics, we can try to get a sense of why they have invested in these products. And so what, what, we observed, so we, we are are also like in terms of time period, we have this data for 2002 to 2007, which is, the period when these products are introduced in Sweden. So this is really like, but at the end of the period, 15%

06:10 - of households have invested in this products. So they have been massively adopted in, in, in Sweden because within five years we have 15% of households investing in these products. And so we, we, we can, observe exactly who invested in these products. And because we have the entire portfolio composition, we can see, the impact on, household overall stock market participation. Like what is their exposure to, stock markets

06:38 - after they invested in these products and how it is increasing because these products, the underlying asset is in equity, as I said, and it's a way to participate in the positive performance of the stock market. And so what we observe, so we observed that those households who did invest in these products, their stock market participation increased more during other households.

07:04 - And it's even more so the case for those who are very reluctant to participate in stock markets. Exactly. So we can observe what were the stock market participation at the very beginning of the period, and we will find a big effect on these households who had a very small stock market participation example. So if you want to know more about the methodology, one big challenge here is that, we cannot sell, like what the results I gave you are just correlation.

07:30 - We find that those who participate more in t share, but there is a risk of reverse causality or simultaneity. So maybe, maybe these products because they wanted to participate more in stock markets. So to address this issue, we use exogenous shock to the supply of these products. So what we have is that we have the bank of each household, like in which banks are, investing ante. And so in, and so we know that not all banks are offering these products

07:59 - and not at the same time. So we can, we can build the measure of supply, from banks that is not related to household characteristics. And we show that it does explain indeed the participation in these products. It's also because like the relationship between household and banks is so sticky that they will, they will consider the products that are offered by their banks, first. And, and so we, so we do observe that

08:25 - what the bank offers does affect how people invest houses who are offers for products. They are like more likely to invest in these products and it makes them participate more in, in stock markets even more so if they were very reluctant to do so. initially we do find an increase in stock market participation, even more so for houses who are not, participating in stock, of almost not participating in in stock markets, initially. So what it implies is, that they do benefit more from,

08:55 - from the risk premium, but whether or not it increases welfare, this is another question. So to address this question, we use a theoretical model, because we want to estimate the impact on the utility of households. So we did, an economic model where we make, assumption about the utility function of household, and we try to figure out which kind of utility function can explain their demand, these products and what we can infer in terms of welfare.

09:25 - So first we find that, you need, you need a non-standard utility function to to account for the demand for these products. so you need houses that put a lot of weight on the negative part of the stock market. So it means you, you, you need less aversion of very pessimistic, beliefs. And so then, if you, if you take into account these, type of utility functions, which are in fact relatively, like there is a large literature showing

09:53 - that indeed it's likely that there is less aversion and there there is pessimistic belief, then you can account for the demand for these products. And also you, it can increase potentially, welfare by improving stock market participation. So benefit from, higher, income from the stock, market, or an increased wealth and an increased, consumption. the assumption here is that, these products are fairly priced a risk with,

10:28 - innovative products. Is that because there's a lot of information at asymmetries because the market might not be perfectly competitive, banks are able to extract rent. So the question is at how these products are priced. So in the beginning of the 2000 in Sweden during our, during our observation period where we have the data, in fact, these products were fairly priced, but it's still beneficial to, to households. So we're talking about a 2% markup,

10:58 - for banks on average. So this is a clear condition. So to conclude, if these products are fairly priced, they can increase welfare. But one has to be aware that with non in air products, it's very likely to obfuscate, households and potentially to, to hide once. So it might be the case that banks could offer these products that are very attractive for, for loss adverse households

11:26 - or PE households with pessimistic beliefs and charge excessively for these products where banks offer these kind of products. But with three, 4% markups in this case, like the welfare gains, decrease and the benefits, for households might, might just disappear with our welfare analysis. We want to show also that, it depends also on how these products are Priced. And so

11:53 - from the perspective of reor, it's important to get a sense of the pricing of the products. What are the markups for banks? potentially it's, if you think about policy implication, one of them could be to disclose, to be transparent about markups, to make sure that the market is, as competitive as possible to make sure that these products do benefit, households. And more generally, like you could think of, applications for these, products, if you think about,

12:25 - saving for retirement. so are, are even, we could be more creative. Like the, the, what it suggests is that the design of security products could be used in different situations depending on what we would expect people to do, in a way that could increase their, their, their utility.

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