Preparation for Retirement, Financial Literacy and Cognitive Resources
Traditional economic models assume that individuals have full information and act perfectly rationally. However, we show that there is considerable variation in financial literacy in the population and propose modeling the acquisition of financial knowledge in a human capital production framework. The model makes several predictions, notably with respect to portfolio choice. For example, it helps explain household non-participation in the stock market for some fraction of the population, and it provides guidance about the share of risky assets to hold for other types of households. Estimation of the human capital production function for financial knowledge on data from the Cognitive Economics Survey yields results that are consistent with important features of the model.
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| Length: | 50 pages |
| Date of creation: | Sep 2008 |
| Date of revision: | |
| Handle: | RePEc:mrr:papers:wp190 |
| Contact details of provider: | Postal: Phone: (734) 615-0422 Fax: (734) 647-4575 Web page: http://www.mrrc.isr.umich.edu/publications/papers/Email: More information through EDIRC
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- Haliassos, Michael & Bertaut, Carol C, 1995. "Why Do So Few Hold Stocks?," Economic Journal, Royal Economic Society, vol. 105(432), pages 1110-29, September.
- Laurent E. Calvet & John Y. Campbell & Paolo Sodini, 2007.
"Down or Out: Assessing the Welfare Costs of Household Investment Mistakes,"
Journal of Political Economy,
University of Chicago Press, vol. 115(5), pages 707-747, October.
- Laurent E. Calvet & John Y. Campbell & Paolo Sodini, 2006. "Down or Out: Assessing the Welfare Costs of Household Investment Mistakes," Harvard Institute of Economic Research Working Papers 2107, Harvard - Institute of Economic Research.
- Laurent E. Calvet & John Y. Campbell & Paolo Sodini, 2006. "Down or Out: Assessing the Welfare Costs of Household Investment Mistakes," NBER Working Papers 12030, National Bureau of Economic Research, Inc.
- Calvet, Laurent & Campbell, John Y. & Sodini, Paolo, 2006. "Down or out: assessing the welfare costs of household investment mistakes," Les Cahiers de Recherche 832, HEC Paris.
- Calvet, Laurent E. & Campbell, John Y. & Sodini, Paolo, 2006. "Down or Out: Assessing The Welfare Costs of Household Investment Mistakes," Working Paper Series 195, Sveriges Riksbank (Central Bank of Sweden).
- Sodini, Paolo & Calvet, Laurent E. & Campbell, John, 2007. "Down or Out: Assessing the Welfare Costs of Household Investment Mistakes," Scholarly Articles 3122488, Harvard University Department of Economics.
- Patrick J. Bayer & B. Douglas Bernheim & John Karl Scholz, 1996.
"The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers,"
Working Papers
96011, Stanford University, Department of Economics.
- Patrick J. Bayer & B. Douglas Bernheim & John Karl Scholz, 2009. "The Effects Of Financial Education In The Workplace: Evidence From A Survey Of Employers," Economic Inquiry, Western Economic Association International, vol. 47(4), pages 605-624, October.
- Patrick J. Bayer & B. Douglas Bernheim & John Karl Scholz, 1996. "The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers," NBER Working Papers 5655, National Bureau of Economic Research, Inc.
- James Heckman & Pedro Carneiro & Flavio Cunha, 2004.
"The Technology of Skill Formation,"
2004 Meeting Papers
681, Society for Economic Dynamics.
- James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
- Cunha, Flavio & Heckman, James J., 2007. "The Technology of Skill Formation," IZA Discussion Papers 2550, Institute for the Study of Labor (IZA).
- Flavio Cunha & James Heckman, 2007. "The Technology of Skill Formation," NBER Working Papers 12840, National Bureau of Economic Research, Inc.
- Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
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