Learning by Trading

46 Pages Posted: 22 May 2018 Last revised: 30 May 2018

Saumitra Jha

Stanford Graduate School of Business

Moses Shayo

The Hebrew University of Jerusalem - Department of Economics

Date Written: May 29, 2018


The ability of individuals to make sound financial decisions and obtain sound advice is increasingly being questioned. Shortfalls in financial knowledge and confidence are particularly acute among women. This paper explores one easily scalable avenue for improving financial literacy and potentially attenuating this gender gap: learning by online trading in stocks. We randomly assign stocks to individuals and encourage them to trade on our platform for a period of either four or seven weeks. We provide no educational content beyond explaining how the value of their assets are determined and providing links to financial websites. Four months after the intervention, we test participants' financial literacy. We find significant improvements relative to the control group. Importantly, the treatment reduces the gender gap in self-assessed financial knowledge for given objective financial literacy. Treated individuals claim greater familiarity with the stock market, greater willingness to invest in stocks, particularly in foreign assets, and a lower propensity to consult others for financial advice. The effects are greater for those exposed to more volatile stocks and assets that performed better during the study.

Keywords: financial literacy, confidence, gender gap, stockmarket

JEL Classification: A2, G11, G41, J16, O16

Suggested Citation

Jha, Saumitra and Shayo, Moses, Learning by Trading (May 29, 2018). Stanford University Graduate School of Business Research Paper No. 3673. Available at SSRN: https://ssrn.com/abstract=3174944 or http://dx.doi.org/10.2139/ssrn.3174944

Saumitra Jha (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Moses Shayo

The Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, IL Jerusalem 91905

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