Gender- and Education-Related Effects of Financial Sophistication on Wealth Accumulation PDF Download
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Author: Christina E. Bannier
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This study examines two dimensions of financial sophistication, actual and perceived, (i.e., financial literacy and confidence) and their effects on financial wealth accumulation. We employ a novel identification strategy introduced by Lewbel (2012) which utilizes a heteroscedastic covariance restriction to construct instrumental variables. This allows us to estimate causal effects in a setting where conventional instruments are frequently weak and unlikely to satisfy the exclusion criterion. We find strong gender- and education-related differences in the distribution of financial literacy and confidence that moderate their influence on financial wealth: Women's wealth increases particularly strongly in their financial literacy. Higher formal education strengthens this effect, but reduces it for men. Men's wealth rises strongly in (excess) confidence, regardless of their education, while women show a much weaker confidence effect. For highly-educated women, this even turns into a negative impact in case of overconfidence. Programs intended for improving financial literacy will hence be particularly helpful to raise women's wealth levels. Surprisingly, closer alignment between perceived and actual financial sophistication appears less relevant.
Author: Christina E. Bannier
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This study examines two dimensions of financial sophistication, actual and perceived, (i.e., financial literacy and confidence) and their effects on financial wealth accumulation. We employ a novel identification strategy introduced by Lewbel (2012) which utilizes a heteroscedastic covariance restriction to construct instrumental variables. This allows us to estimate causal effects in a setting where conventional instruments are frequently weak and unlikely to satisfy the exclusion criterion. We find strong gender- and education-related differences in the distribution of financial literacy and confidence that moderate their influence on financial wealth: Women's wealth increases particularly strongly in their financial literacy. Higher formal education strengthens this effect, but reduces it for men. Men's wealth rises strongly in (excess) confidence, regardless of their education, while women show a much weaker confidence effect. For highly-educated women, this even turns into a negative impact in case of overconfidence. Programs intended for improving financial literacy will hence be particularly helpful to raise women's wealth levels. Surprisingly, closer alignment between perceived and actual financial sophistication appears less relevant.
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Christina E. Bannier
Publisher:
ISBN:
Category :
Languages : en
Pages : 44
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Book Description
This study examines the influence of actual and perceived financial knowledge (i.e., financial literacy and confidence) on financial wealth. We show that consideration of gender and education as moderators helps to uncover intricate effects. Greater financial literacy increases wealth, with higher education strengthening this effect for women, but weakening it for men. Men's wealth also rises strongly in confidence, regardless of their education, while there is hardly any confidence effect for women. Our results are robust against one-time wealth effects, mode of financial decision making and the employment of different instrumental variables and confidence measures.
Author: Andreas Fagereng
Publisher: International Monetary Fund
ISBN: 1484370066
Category : Business & Economics
Languages : en
Pages : 69
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Book Description
We provide a systematic analysis of the properties of individual returns to wealth using twelve years of population data from Norway’s administrative tax records. We document a number of novel results. First, during our sample period individuals earn markedly different average returns on their financial assets (a standard deviation of 14%) and on their net worth (a standard deviation of 8%). Second, heterogeneity in returns does not arise merely from differences in the allocation of wealth between safe and risky assets: returns are heterogeneous even within asset classes. Third, returns are positively correlated with wealth: moving from the 10th to the 90th percentile of the financial wealth distribution increases the return by 3 percentage points - and by 17 percentage points when the same exercise is performed for the return to net worth. Fourth, wealth returns exhibit substantial persistence over time. We argue that while this persistence partly reflects stable differences in risk exposure and assets scale, it also reflects persistent heterogeneity in sophistication and financial information, as well as entrepreneurial talent. Finally, wealth returns are (mildly) correlated across generations. We discuss the implications of these findings for several strands of the wealth inequality debate.
Author: Mariko Lin Chang
Publisher: Oxford University Press
ISBN: 0199896607
Category : Business & Economics
Languages : en
Pages : 225
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Book Description
The first book to focus on the differences in wealth between women and men, Mariko Lin Chang draws on the most comprehensive national data on wealth and on in-depth interviews to show how differences in earnings, in saving and investing, and, most important, the demands of care-giving all contribute to the gender-wealth gap. A comprehensive portrait of where women and men stand with respect to wealth, Shortchanged not only sheds light on why women lack wealth, but also offers solutions for improving the financial situation of women, men, and families.
Author: OECD
Publisher: OECD Publishing
ISBN: 9264202730
Category :
Languages : en
Pages : 100
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Book Description
This book provides policy guidance to help policy makers address women's and girls' needs for financial education, and a comprehensive analysis of the current status of knowledge on gender differences in financial literacy and policy responses in terms of financial education for women and girls.
Author: Alexis Yamokoski
Publisher:
ISBN:
Category :
Languages : en
Pages : 306
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Book Description
Since the late 1970s, researchers find that an increasingly large percentage of the economically disadvantaged are women, a fact contributing to a severe gender gap in income attainment. Most research on poverty and gender inequality focuses on salaries and wages as the primary proxy for evaluating economic well-being. However, earned income fluctuates greatly and may not provide an accurate picture of the economic welfare of an individual over time. In contrast, wealth---understood as the value of person's assets less their debts---captures long-term economic security.
Author: Luigi Guiso
Publisher: MIT Press
ISBN: 9780262072212
Category : Business & Economics
Languages : en
Pages : 552
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Book Description
Theoretical and empirical analysis of the structure of household portfolios.
Author: Jere R. Behrman
Publisher:
ISBN:
Category : Academic achievement
Languages : en
Pages : 42
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Book Description
Financial literacy and schooling attainment have been linked to household wealth accumulation. Yet prior findings may be biased due to noisy measures of financial literacy and schooling, as well as unobserved factors such as ability, intelligence, and motivation that could enhance financial literacy and schooling but also directly affect wealth accumulation. We use a new household dataset and an instrumental variables approach to isolate the causal effects of financial literacy and schooling on wealth accumulation. While financial literacy and schooling attainment are both strongly positively associated with wealth outcomes in linear regression models, our approach reveals even stronger and larger effects of financial literacy on wealth. Estimated impacts are substantial enough to suggest that investments in financial literacy could have large positive effects on household wealth accumulation.
Author: Alexander Joel Rosenberg
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 136
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Book Description
Financial literacy is an important body of knowledge and set of skills that consumers need to successfully navigate the 21st century economy. Prior research shows financial literacy bears a significant relationship, along with other factors, to the wealth outcomes of adults. While some of this research has examined how specific behaviors related to self-control affect wealth, few include the effects of parental socialization as measured through advice given from parents to children. This paper estimates an empirical relationship amongst wealth, literacy, and parental advice using data from the National Longitudinal Study of Youth’s 1997 Cohort (NLSY 97). I find financial literacy and parental advice are strongly related to wealth. I also find that women on average have lower wealth than men, even after controlling for literacy, advice, and other demographics. The source of the parental advice also proves statistically important.
