Investment in financial literacy and saving decisions
- We present an intertemporal consumption model of consumer investment in financial literacy. Consumers benefit from such investment because their stock of financial literacy allows them to increase the returns on their wealth. Since literacy depreciates over time and has a cost in terms of current consumption, the model determines an optimal investment in literacy. The model shows that financial literacy and wealth are determined jointly, and are positively correlated over the life cycle. Empirically, the model leads to an instrumental variables approach, in which the initial stock of financial literacy (as measured by math performance in school) is used as an instrument for the current stock of literacy. Using microeconomic and aggregate data, we find a strong effect of financial literacy on wealth accumulation and national saving, and also show that ordinary least squares estimates underestate the impact of financial literacy on saving. JEL Classification: E2, D8, G1, J24 Keywords: Financial Literacy, Cognitive Abilities, Human Capital, Saving
Verfasserangaben: | Tullio JappelliORCiDGND, Mario Padula |
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URN: | urn:nbn:de:hebis:30-92954 |
Titel des übergeordneten Werkes (Deutsch): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2011,07 |
Schriftenreihe (Bandnummer): | CFS working paper series (2011, 07) |
Dokumentart: | Arbeitspapier |
Sprache: | Englisch |
Jahr der Fertigstellung: | 2011 |
Jahr der Erstveröffentlichung: | 2011 |
Veröffentlichende Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Datum der Freischaltung: | 08.03.2011 |
Freies Schlagwort / Tag: | Cognitive Abilities; Financial Literacy; Human Capital; Saving |
GND-Schlagwort: | Privater Verbrauch; Kreditmarkt; Wissen; Sparen; Modell |
Ausgabe / Heft: | Version January 25, 2011 |
Seitenzahl: | 44 |
HeBIS-PPN: | 234642947 |
Institute: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
DDC-Klassifikation: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Sammlungen: | Universitätspublikationen |
Lizenz (Deutsch): | Deutsches Urheberrecht |