nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2020‒09‒14
six papers chosen by

  1. Financial Literacy, Risk and Time Preferences: Results from a Randomized Educational Intervention By Sutter, Matthias; Weyland, Michael; Untertrifaller, Anna; Froitzheim, Manuel
  2. Paying Too Much? Price Dispersion in the U.S. Mortgage Market By Neil Bhutta; Andreas Fuster; Aurel Hizmo
  3. La inclusión financiera en América Latina y Europa By Sofía Orazi; Lisana Belén Martinez; Hernán P. Vigier
  4. Sustainable Development Model of China’s Rural Financial Inclusion and its Effects: A Case Study of Yueqing Rural Commercial Bank By Zhuo, Yubo; Wu, Zheng; Wang, Shuyi; Wang, Xinxin
  5. Determinants of individual sustainable investment behavior - A framed field experiment By Gunnar Gutsche; Heike Wetzel; Andreas Ziegler
  6. Pension Information and Women's Awareness By Angelici, Marta; Del Boca, Daniela; Oggero, Noemi; Profeta, Paola; Rossi, Maria Cristina; Villosio, Claudia

  1. By: Sutter, Matthias (Max Planck Institute for Research on Collective Goods); Weyland, Michael; Untertrifaller, Anna (University of Cologne); Froitzheim, Manuel (University of Siegen)
    Abstract: We present the results of a randomized intervention in schools to study how teaching financial literacy affects risk and time preferences of adolescents. Following more than 600 adolescents, aged 16 years on average, over about half a year, we provide causal evidence that teaching financial literacy has significant short-term and longer-term effects on risk and time preferences. Compared to two different control treatments, we find that teaching financial literacy makes subjects more patient, less present-biased, and slightly more risk-averse. Our finding that the intervention changes economic preferences contributes to a better understanding of why financial literacy has been shown to correlate systematically with financial behavior in previous studies. We argue that the link between financial literacy and field behavior works through economic preferences. In our study, the latter are also related in a meaningful way to students' field behavior.
    Keywords: time preferences, risk preferences, randomized intervention, financial literacy, field experiment
    JEL: C93 D14 I21
    Date: 2020–08
  2. By: Neil Bhutta; Andreas Fuster; Aurel Hizmo
    Abstract: We document wide dispersion in the mortgage rates that households pay on identical loans, and show that borrowers' financial sophistication is an important determinant of the rates obtained. We estimate a gap between the 10th and 90th percentile mortgage rate that borrowers with the same characteristics obtain for identical loans, in the same market, on the same day, of 54 basis points|equivalent to about $6,500 in upfront costs (points) for the average loan. Time-invariant lender attributes explain little of this rate dispersion, and considerable dispersion remains even within loan officer. Comparing the rates borrowers obtain to the real-time distribution of rates that lenders could offer for the same loan and borrower type, we find that borrowers who are likely to be the least financially savvy tend to substantially overpay relative to the rates available in the market. In the time series, the average overpayment decreases when overall market interest rates rise, suggesting that a rising level of borrowing costs encourages more search and negotiation. Furthermore, new survey data provide direct evidence that financial knowledge and shopping both affect the mortgage rates borrowers get, and that shopping activity increases with the level of market rates.
    Keywords: Financial literacy; Household finance; Interest rates; Mortgages; Price dispersion; Search; Shopping
    JEL: E43 G21
    Date: 2020–08–21
  3. By: Sofía Orazi; Lisana Belén Martinez; Hernán P. Vigier
    Keywords: Inclusión financiera; clúster jerárquicos; América Latina; Europa.Keywords: financial inclusion; hierarchical clustering; Latin America; Europe.
    JEL: G23 O16 O17 C38 N26 N24
    Date: 2019–07–01
  4. By: Zhuo, Yubo; Wu, Zheng; Wang, Shuyi; Wang, Xinxin
    Keywords: Community/Rural/Urban Development, Risk and Uncertainty, Agribusiness
    Date: 2020–07
  5. By: Gunnar Gutsche (University of Kassel); Heike Wetzel (University of Kassel); Andreas Ziegler (University of Kassel)
    Abstract: This paper employs a new empirical approach for eliciting preferences for and determinants of sustainable investments at the individual investor level. We examine data from an incentivized framed field experiment that was part of a representative survey among financial decision makers in German households. The analysis reveals strong preferences for sustainable funds. These preferences are especially driven by non-pecuniary factors such as financial literacy, environmental values, and social norms. Interestingly, economic preferences or the Big Five personality traits are only of minor relevance. Our results provide useful implications for the discussion on how to mobilize individual investors for sustainable development.
    Keywords: Sustainable investments; individual investors; determinants; revealed preferences; framed field experiment
    JEL: G11 Q56 G02 A12 A13
    Date: 2020
  6. By: Angelici, Marta (University of Milan Bicocca); Del Boca, Daniela (University of Turin); Oggero, Noemi (University of Turin); Profeta, Paola (Bocconi University); Rossi, Maria Cristina (University of Turin); Villosio, Claudia (Collegio Carlo Alberto)
    Abstract: We explore the role of financial and pension information in increasing women's knowledge and awareness of their future pension status, and consequently, in reducing the gender pension gap. A representative sample of 1249 Italian working women were interviewed to assess their knowledge about pensions and financial issues and about their own savings and personal wealth planned for retirement. The responses showed that their knowledge and awareness of retirement planning was limited. We then ran a randomized experiment to evaluate the effect of increased information regarding pensions on women's awareness, knowledge, and behaviors. Women in the treated group were provided information in the form of three short online tutorials. A follow-up survey shows that these women became more interested and aware of pension schemes and retirement options after completing the tutorials and were more likely to be better informed and keen to obtain further information. When looking at changes in behavior, we find that treated women who are closer to retirement are more likely to believe that they would make different work-life decisions if they received specific pension information in a timely fashion. They are also more likely to have a supplementary pension fund if they are concerned about their standard of living after retirement.
    Keywords: women, pension, savings, financial education
    JEL: H31 J22
    Date: 2020–08

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