Brazil’s Copernican 2023 Household Finance Innovations Transform Micro and Macro Finance

A recent book, Campbell and Ramadorai (2025), on household finance, argues that the personal finance “system seems rigged for the few against the many”, and they “advocate for rebuilding the financial system”. Amen! However, they not only miss highlighting two innovative, award-winning, household finance instruments issued by Brazil in 2023 (a retirement bond, RendA+, and an education bond, Educa+) that make their entire case for reforming the household finance paradigm, but also repeat incorrect advice that Treasury Inflation-Protected Securities (TIPS) or inflation-linked gilts are the “safe” asset (see also Bodie and Clowes 2003) – a claim Merton (2014) debunked in a paper on the looming, global retirement crisis. Profs. Campbell and Ramadorai cannot be faulted for these mistakes because academic finance is largely rooted in Expected Utility Theory (EUT), and household finance theory in the Capital Asset Pricing Model (CAPM), and both are based on the primary assumption that “individuals maximize the expected utility of wealth”. Moreover, the Anglo-Saxon/Global North bias in finance theory and practice is ignoring household finance innovation from the Global South. The practical perspective, based on the reality of investing, however requires a different starting assumption as this assumption is wrong on at least four counts (Muralidhar 2024b). A somewhat new approach to household finance, Goals-based Investing or Liability Driven Investing, GBI and LDI, respectively, focuses instead on the cash flows of the goals of individuals and institutions. That changes the entire micro and macro finance paradigm from an absolute wealth to a relative wealth (and sharia-compliant) perspective as we demonstrate in this paper, using the innovations pioneered by Brazil back in 2023 (which now have a 3-year track record of success). The anchor to this paper is the Cochrane (2022) observation that, “Switching to a payoff perspective may change lots of procedures in finance.” And countries as diverse as the US, UK, Colombia, Ireland, Spain, Japan or even South Africa and countries in the Middle East should adopt these innovation as Brazil has shown the way.