DP12100 Financial Literacy Externalities

Author(s): Michael Haliassos, Thomas Jansson, Yigitcan Karabulut
Publication Date: June 2017
Date Revised: April 2019
Keyword(s): financial literacy, household finance, Refugees, Social interactions
JEL(s): D14, E21, F22, G11, I28
Programme Areas: Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12100

This paper uses unique administrative data and a quasi-field experiment of exogenous allocation 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 exposure and of a social multiplier of financial knowledge, but also of unfavorable distributional aspects of externalities. Exposure promotes saving in private retirement accounts and stockholding, especially when neighbors have economics or business education, but only for educated households and when interaction possibilities are substantial. Findings point to transfer of knowledge rather than mere imitation or effects through labor, education, or mobility channels.