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Financial Literacy Externalities

Author

Listed:
  • Michael Haliassos
  • Thomas Jansson
  • Yigitcan Karabulut
  • Lauren Cohen

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.

Suggested Citation

  • Michael Haliassos & Thomas Jansson & Yigitcan Karabulut & Lauren Cohen, 2020. "Financial Literacy Externalities," The Review of Financial Studies, Society for Financial Studies, vol. 33(2), pages 950-989.
    • Handle: RePEc:oup:rfinst:v:33:y:2020:i:2:p:950-989.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhz076
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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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