New Economics Papers
on Neuroeconomics
Issue of 2011‒03‒12
two papers chosen by

  1. Neuroeconomics? By David K Levine
  2. Who lost the most? Financial literacy, cognitive abilities, and the financial crisis By Tabea Bucher-Koenen; Michael Ziegelmeyer

  1. By: David K Levine
    Date: 2011–03–03
  2. By: Tabea Bucher-Koenen (MEA and University of Mannheim, 68131 Mannheim, Germany.); Michael Ziegelmeyer (Economics and Research Department, Banque centrale du Luxembourg.)
    Abstract: We study how and to what extent private households are affected by the recent financial crisis and how their financial decisions are influenced by this shock. Our analysis reveals that individuals with low levels of financial literacy are less likely to have invested in the stock market and thus are less likely to report losses in wealth. Yet, individuals with low financial literacy are more likely to sell their assets which lost in value (realize losses). This reaction to short-term losses has potential long-term consequences if individuals do not participate in markets' recovery and face lower returns in the long run. JEL Classification: D91, D14, G11.
    Keywords: financial literacy, cognitive ability, financial crisis, life-cycle savings, saving behavior, portfolio choice
    Date: 2011–02

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