The article compares two models of how people manage financial risks, like saving money or borrowing, and how well they match real-life data. The researchers found that while both models work similarly well with basic measures, they show very different patterns when looking at the bigger picture. One model suggests that people smooth out their consumption over time, while the other shows more ups and downs. The data also suggests that errors in measuring consumption can make things look less extreme than they really are. Overall, the evidence supports the idea that people tend to rely more on self-insurance methods like saving money rather than limited commitment contracts.