Social Transmission of Financial Decision Making Skills. A Case of the Blind Leading the Blind?
152 Pages Posted: 31 Dec 2016 Last revised: 1 Mar 2022
Date Written: February 28, 2022
We investigate the impact of peer interaction on the quality of financial decision making in a laboratory experiment. Face-to-face communication with a randomly assigned peer significantly improves the quality of subsequent private decisions even though simple mimicry would have the opposite effect. We present evidence that the mechanism involves general conceptual learning (because the benefits of communication extend to previously unseen tasks), and that the most effective learning relationships are horizontal rather than vertical (because people with weak skills benefit most when their partners also have weak skills). The benefits of demonstrably effective financial education do not propagate to peers.
Keywords: Experiment, Behavioral Welfare Economics, Peer Effects, Financial Literacy
JEL Classification: D03, D12, D69, G02
Suggested Citation: Suggested Citation