DP12100 Financial Literacy Externalities

Author(s): Michael Haliassos, Thomas Jansson, Yigitcan Karabulut
Publication Date: June 2017
Date Revised: November 2017
Keyword(s): financial literacy, household finance, Refugees, Social interactions
JEL(s): D14, E21, F22, G11, I28
Programme Areas: Financial Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12100

This paper uses unique administrative data and a quasi-field experiment of exogenous allocation to apartments in Sweden to estimate medium- and longer-run effects on financial behavior from exposure to financially literate neighbors. It contributes evidence of causal impact of financial literacy and points to a social multiplier of effective programs to enhance it. Exposure promotes saving in private retirement accounts and stockholding, especially when neighbors have economics or business education, but only for educated or male-headed households. Findings point to relevant knowledge transfer through social interactions rather than to labor market or other channels linked to local economic conditions.