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Source: HBS Working Paper series
Resulting in 1 citation.
1. Cole, Shawn
Shastry, Gauri Kartini
Smart Money: The Effect of Education, Cognitive Ability, and Financial Literacy on Financial Market Participation
HBS Working Paper Number: 09-071, Harvard Business School, February 2009.
Also: http://hbswk.hbs.edu/item/6093.html
Cohort(s): NLSY79
Publisher: Harvard Business School
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); Financial Literacy; Financial Market Participation; Locus of Control (see Rotter Scale)

Permission to reprint the abstract has not been received from the publisher.

Household financial market participation affects asset prices and household welfare. Yet, our understanding of this decision is limited. Using an instrumental variables strategy and dataset new to this literature, we provide the first precise, causal estimates of the effects of education on financial market participation. We find a large effect, even controlling for income. Examining mechanisms, we demonstrate that cognitive ability increases participation; however, and in contrast to previous research, financial literacy education does not affect decisions. We conclude by discussing how education may affect decision-making through: personality, borrowing behavior, discount rates, risk-aversion, and the influence of employers and neighbors.
Bibliography Citation
Cole, Shawn and Gauri Kartini Shastry. "Smart Money: The Effect of Education, Cognitive Ability, and Financial Literacy on Financial Market Participation." HBS Working Paper Number: 09-071, Harvard Business School, February 2009.