Financial decisions of Russian households under uncertainty

Low-, middle- or high-income households must make complex financial decisions every day. Economic models offer prescriptions on how households should optimally choose between consumption and savings. But real finance behavior deviates from what models prescribe. Especially financial decisions are extremely complex under uncertainly. The uncertainty creates significant difficulty to make finance decisions. The most important to maintain stable household lifestyles under uncertainly. If we look at the data, we observe households’ different consumption and saving behaviors given similar levels of income and wealth. Therefore, there are other determinants that explain the heterogeneity in financial decisions under uncertainly. The authors recommend that the initial step of research should be to define the financial decision of household. This definition should be comprehensive enough and include all the contradictory real households’ specificities. The paper explores and defines some financial decisions drivers of Russian households under uncertainty. The authors analyze the inflation expectations, reasons for saving, investment preferences and risk attitudes of Russian households. The analysis has allowed making a conclusion noticeable connection on the financial knowledge levels and the financial decisions. We discussed influence some drivers to make financial decisions of Russian households such as expectations, preferences, risk attitudes, financial literacy, deep patterns, information asymmetry and other ones. However, the heterogeneity in the household finance choices cannot be explained of these factors only. Therefore, the key message of this paper is that this information should be considered as a one step to understanding of nature Russian households’ financial behavior under uncertainty.