Financial Literacy Externalities

Michael Haliassos, Thomas Jansson, Yigitcan Karabulut and Lauren Cohen

The Review of Financial Studies, 2020, vol. 33, issue 2, 950-989

Abstract: We use unique administrative data and a quasi-field experiment of exogenous allocation in Sweden to estimate medium- and longer-run effects of peoples’ exposure to financially literate neighbors on their financial behavior. We contribute evidence of (1) a causal impact of exposure and of a social multiplier of financial knowledge and (2) unfavorable distributional aspects of externalities. Exposure promotes saving in private retirement accounts and stockholding, especially when neighbors have economics or business education, but only for educated households and for substantial interaction possibilities. Findings point to a transfer of knowledge rather than mere imitation or effects through labor, education, or mobility channels.Authors have furnished code/data/an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Date: 2020
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Working Paper: Financial Literacy Externalities (2017)
Working Paper: Financial Literacy Externalities (2017)
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