Of course it reduces security. It makes you resort to either 1.) typing it out manually while you can't see if you made a mistake 2.) using developer tools to set the 'value' attribute directly "SPP" discourages use of a password manager. End of story. I also see this pattern used on banking websites for inputs like an account number. This drives me crazy as well for the same reason. The computer can get it right mor…
It's interesting that a lot of us are assuming that pasting encourages the use of password managers. However; I worry that this is a very BIG assumption. Even in my IT-literate circles password management usage is low. In my non-IT circles it is non-existent, and not because of SPP particularly; I suspect SPP (which I agree is silly) derived from an understanding that allowing an average person to paste passwords mea…
But that is password management, it's just crap password management.
There's certainly an argument that a plaintext-on-desktop stored list of high-entropy passwords is better than a single in-(human)-memory low-entropy password. With the recent wannacrypt reminder, that argument's slightly diminished, though.
I think the highest impact (i.e. fn of quick/low effort, high reward) suggestion to non tech-literate folk is to use 2FA on their email account. I like and usually suggest Authy, mainly because it's available as a Chrome app too whereas e.g. Google Authenticator is just on Android/iOS. (I assume it's clear, but email account as opposed to something else since it's so near universally treated as the fallback option.)
That's a good base for them to start using 2FA everywhere else it's possible, too.