A Collective Investment in Financial Literacy by Heterogeneous Households

Stylianos Papageorgiou and Dimitrios Xefteris

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: Skills obtained by a national strategy, plus intrinsic skills, contribute to each household's financial literacy, which is shown to determine whether and to what extent a household invests. Ends-against-the-middle preferences arise as to the strategy's funding: Households with too low or too high total skills have a decreasing utility, as opposed to households with moderate skills. Moreover, the property of single-peaked preferences is violated. Our central result is that, despite the lack of well-behaved preferences, competing office-motivated political candidates propose the same-efficient-funding level under plausible assumptions, including that they are sufficiently differentiated about issues other than financial literacy.

Keywords: financial literacy; electoral competition; ends-against-the-middle; differentiated candidates (search for similar items in EconPapers)
JEL-codes: D72 G53 H52 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2021-07
New Economics Papers: this item is included in nep-cdm, nep-fle, nep-isf and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:04-2021

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