The New Palgrave Dictionary of Money and Finance is a successor to the 1987 work The New Palgrave: A Dictionary of Economics. Both dictionaries claim descent from Palgrave's Dictionary of Political Economy, published as a summary of the state of economics during the 1890s. The same team of three editors is responsible for both New Palgrave dictionaries,1 and there are many similarities in approach. Indeed, about 20 percent of the essays in the New Palgrave Money and Finance are reprinted from the New Palgrave Economics (and ten essays are reprinted from the original Palgrave). There are also some obvious differences between the two New Palgrave dictionaries. The New Palgrave Economics had a much broader scope, aiming to cover all of modern economics. It was considerably larger than the New Palgrave Money and Finance, with four volumes rather than three, 3500 pages rather than 2500, and almost 2000 essays rather than 1000 or so. The New Palgrave Economics included biographical essays, which took up about a third of the work; the New Palgrave Money and Finance has no biography but includes many short definitions of technical terms. Last but not least, the New Palgrave Economics omitted empirical topics to concentrate on economic theory and history of economic thought, while the New Palgrave Money and Finance covers much empirical material.

This lecture considers the case for consumer financial regulation in an environment where many households lack the knowledge to manage their financial affairs effectively. The lecture argues that financial ignorance is pervasive and unsurprising given the complexity of modern financial products, and that it contributes meaningfully to the evolution of wealth inequality. The lecture uses a stylized model to discuss the welfare economics of paternalistic intervention in financial markets, and discusses several specific examples including asset allocation in retirement savings, fees for unsecured short-term borrowing, and reverse mortgages.

Efficient contracting predicts that ex ante severance pay contracts are offered to chief executive officers (CEOs) as protection against downside risk and to encourage investment in risky projects with a positive net present value (NPV). Consistent with this prediction, we find that ex ante contracted severance pay is positively associated with proxies for a CEO’s risk of dismissal and costs the CEO would incur from dismissal. Additionally, we show that the contracted severance payment amount is positively associated with CEO risk taking and the extent to which a CEO invests in projects that have a positive NPV. Overall, our findings imply that ex ante severance pay contracts are consistent with efficient contracting.