nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2019‒04‒22
two papers chosen by

  1. How Cognitive Ability and Financial Literacy Shape the Demand for Financial Advice at Older Ages By Hugh Hoikwang Kim; Raimond Maurer; Olivia S. Mitchell
  2. Losers distribution, with applications to financial inclusion: Lightning can strike twice, but it may not strike at all By John H. Y. Edwards

  1. By: Hugh Hoikwang Kim; Raimond Maurer; Olivia S. Mitchell
    Abstract: We investigate how cognitive ability and financial literacy shape older Americans’ demand for financial advice using an experimental module in the 2016 Health and Retirement Study. We show that cognitive ability and financial literacy strongly improve the quality, but not the quantity, of financial advice sought. Most importantly, the financially literate and more cognitively able tend to seek financial help from professionals rather than family members, and they are less likely to accept so-called ‘free’ financial advice that may entail conflicts of interest. Nevertheless, those with higher cognitive function also tend to distrust financial advisors, leading them to eschew their services.
    JEL: D14 G11 J26
    Date: 2019–04
  2. By: John H. Y. Edwards (Tulane University)
    Abstract: This paper develops the "Losers distribution" a new discrete probability distribution that describes the number of losers in a k-player game with n-fold identical trials. The problem of financial inclusion demonstrates its application. Fair subsidized lotteries are proposed as a complement to microfinance for providing financing to the poor.
    Keywords: Financial Exclusion, Inequality, Financial Market Failure, Income Distribution, Poverty, Lotteries
    JEL: O1 C1 G1 H4
    Date: 2019–04

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