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Selection into Financial Education and Effects on Portfolio Choice

Author

Listed:
  • Irina Gemmo
  • Pierre-Carl Michaud
  • Olivia S. Mitchell

Abstract

To examine how financial education affects financial outcomes, one must evaluate whether and how sample selection may bias inferences regarding program impacts. Our incentivized experiment reveals how such selection influences estimated financial education effects. The more financially literate and those expecting higher gains pay more to purchase education, while those who consider themselves very financially literate pay less. Using portfolio allocation tasks, we show that the financial education increases portfolio efficiency and welfare by almost 20 and 3 percentage points, respectively. In our setting, selection does not greatly influence estimated program effects, comparing those participating and those who do not.

Suggested Citation

  • Irina Gemmo & Pierre-Carl Michaud & Olivia S. Mitchell, 2023. "Selection into Financial Education and Effects on Portfolio Choice," Cahiers de recherche / Working Papers 16, Institut sur la retraite et l'épargne / Retirement and Savings Institute.
    • Handle: RePEc:rsi:irersi:16
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    References listed on IDEAS

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    Cited by:

    1. Carolina Guerini & Donato Masciandaro, 2023. "Financial Education between Market and State: Private Commitment, Conflicts of Interest and Public Certification," BAFFI CAREFIN Working Papers 23213, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

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    More about this item

    Keywords

    Financial Education; Financial Literacy; Portfolio Choice; Selection;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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