CUTTING THROUGH THE FOG: FINANCIAL LITERACY AND FINANCIAL INVESTMENT CHOICES

• 成果类型: Article
• 署名作者: Nieddu, Marco; Pandolfi, Lorenzo
• 署名单位: University of Cagliari; University of Naples Federico II
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1093/jeea/jvz081
• 发表日期: 2021
• 页码: 237-274
• 关键词: education; INFORMATION

摘要

This paper examines the impact of financial literacy on the individual propensity to invest in financial assets. In a laboratory experiment with a two-by-two design, we study how the certainty equivalent of a risky lottery changes when varying the lottery framing and the participants' financial literacy level. We find that presenting the lottery as a financial asset-whose payoffs need to be computed from a given return rate-rather than as a simple coin toss reduces the average value participants assign to the lottery by approximately 20% and lowers their understanding of the lottery's structure. Enhancing financial literacy by explaining the basic financial concepts involved in the description of the financial-asset lottery, offsets the negative effects of the financial framing: it improves respondents' understanding of the lottery and increases the certainty equivalent. Our results-which can be rationalized by ambiguity aversion-shed new light on the linkages between financial literacy and financial investment behavior. Additionally, they highlight the importance of promoting financial education to stimulate households' financial market participation.