No Enemy is Worse than Bad Advice: Financial Information Sources and Household Wealth

Ivan Skliarov () and Lukasz Goczek

No 48, LWS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: This study aims to determine how reliance on different financial information sources affects the US households' probability of earning income from dividends and interest and deciding to save. First, we present the Agent-Based model demonstrating how access to information could affect wealth accumulation. In the empirical part of this research, we use the Luxembourg Wealth Study (LWS) data for the US, covering every third year between 1998 and 2022. Using the probit regression, we estimate the marginal effects of professional advice, mass media, the Internet, advertisements, and family and friends on the probability of earning capital income and saving. We ensured the precision of our estimates by using five imputation replicates and 1,000 replicate weights provided by LWS. Our empirical analysis indicates that some sources of financial information are better than others. Specifically, professional advice and the Internet are the most conducive to capital income and saving. The results of our study emphasize the importance of consulting professionals when making important investment decisions. Additionally, financial training must develop the critical thinking skills necessary to assess information people find online. Receiving precise financial information on time can improve the quality of financial decisions and reduce wealth inequality in the long run.

Pages: 33 pages
Date: 2025-04
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Persistent link: https://EconPapers.repec.org/RePEc:lis:lwswps:48

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