nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2018‒08‒20
two papers chosen by

  1. Individual Heterogeneity and Pension Choices: How to Communicate an Effective Message? By Giovanni Gallo; Costanza Torricelli; Arthur van Soest
  2. Digital Governance in Developing Countries: Beneficiary Experience and Perceptions of System Reform in Rajasthan, India By Alan Gelb; Anit Mukherjee; Kyle Navis

  1. By: Giovanni Gallo; Costanza Torricelli; Arthur van Soest
    Abstract: We use the Elaboration Likelihood Model (ELM) to explain how communication influences pension choices in a heterogeneous population. We exploit the 2007 Italian reform that allowed transferring future severance pay contributions into a pension fund and was accompanied by an information campaign with a clear message. According to ELM, individuals follow either a “central route” or a “peripheral route” depending on their motivation and ability to process, and eventually change or retain their initial attitude. Based on data from the Bank of Italy Survey on Household Income and Wealth, we find that not only financial literacy plays a relevant role in the employees’ elaboration process, but also the individual’s comprehension of the specific choice object, the personal relevance of the decision, cognitive skills, and contextual elements (e.g. unions, employer pressure). These considerations have policy implications for the effectiveness of information messages in the pension domain.
    Keywords: pension choices, Elaboration Likelihood Model, cognitive skills, contextual elements,financial literacy
    JEL: A12 C25 D03 D14
    Date: 2017–04
  2. By: Alan Gelb (Center for Global Development); Anit Mukherjee (Center for Global Development); Kyle Navis (Center for Global Development)
    Abstract: India is at the forefront of the use of digital technology to transform the way in which citizens interact with states. This paper provides a picture of the perceived impact of digitization reforms in Rajasthan, based on a survey of beneficiaries of several benefit programs. We find that, on balance, the reforms appear to have improved perceptions of service delivery despite some difficulties during the digitization process and the possibility—which we cannot fully assess with our data—that there could have been some degree of exclusion. The proportion of people preferring the new systems, at 40–60 percent, far exceeded the proportion who expressed a preference for the old system (5–12 percent). In the case of food and cooking gas subsidy reforms, the reason for the preference is relatively clear—they considered that the new systems gave them greater control over their entitlements and reduced the ability of others to claim their benefits or divert them. The main problems arise from biometric authentication. Shifting pensions from postal delivery to bank deposits is overwhelmingly supported, partly because of better regularity. Reforms in Rajasthan also had two cross-cutting goals: financial inclusion and women’s empowerment. Our survey confirms that virtually all respondents have bank accounts, often two or more per family, as do all heads of household who are officially mandated to be women. Two thirds of these women had not owned bank accounts before the reforms. Mobiles emerge, however, as a male preserve. This suggests a further frontier for policies and programs to shift India towards a digital society—ensuring that all people have the capacity to access and to use digital technology.
    JEL: H10 H11 O10
    Date: 2018–07–10

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