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

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  • Ivan Skliarov
  • Łukasz Goczek

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.

Suggested Citation

  • Ivan Skliarov & Łukasz Goczek, 2025. "No Enemy is Worse than Bad Advice: Financial Information Sources and Household Wealth," LWS Working papers 48, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:lwswps:48
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    References listed on IDEAS

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    1. Mitchell Marsden & Cathleen Zick & Robert Mayer, 2011. "The Value of Seeking Financial Advice," Journal of Family and Economic Issues, Springer, vol. 32(4), pages 625-643, December.
    2. Kaplan, David M. & Sun, Yixiao, 2017. "Smoothed Estimating Equations For Instrumental Variables Quantile Regression," Econometric Theory, Cambridge University Press, vol. 33(1), pages 105-157, February.
    3. Anirban Chakraborti, 2002. "Distributions Of Money In Model Markets Of Economy," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 13(10), pages 1315-1321.
    4. Stephen Kinsella & Matthias Greiff & Edward J Nell, 2011. "Income Distribution in a Stock-Flow Consistent Model with Education and Technological Change," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 37(1), pages 134-149.
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