It's All Relative: Brazil's Copernican Household Finance Innovations Transform Micro and Macro Finance

Brazil's 2023 introduction of two novel household finance instruments-RendA+ (a retirement income bond) and Educa+ (an education income bond)-represents a meaningful shift in how micro and macro finance theory and practice should approach investments and policy design. Rather than framing financial decision-making around abstract notions of "expected utility of wealth", these instruments are explicitly designed around household finance's cash-flow (also called "goals"). In doing so, Brazil has operationalized a goals-based approach to finance that has implications well beyond household investing, extending to asset pricing, financial inclusion, monetary policy, and sovereign debt management. It also unintentionally allowed for a robust, Islamic Finance-centric, sharia-compliant micro and macro finance theory.