Financial Literacy and Economic Outcomes

29 Pages Posted: 3 Jan 2019 Last revised: 20 Jun 2019

See all articles by David Puelz

David Puelz

University of Chicago - Booth School of Business

Robert Puelz

Southern Methodist University (SMU) - Real Estate, Insurance, & Business Law Department

Date Written: March 26, 2019

Abstract

We explore the relationship between financial literacy and self-reported economic outcomes using survey data from the United States. Our dataset includes a large number of covariates from the National Financial Capability Study, and we use a new econometric technique developed by Hahn et al. (2018a) to test whether changes in financial literacy are positively related to changes in economic outcomes while controlling for confounders utilizing a Bayesian regression model with strong shrinkage (Carvalho et al., 2010). The estimate of the treatment parameter on financial literacy is positive, and the regularized regression treatment effect estimates provide more confidence about this finding than ordinary least squares. The results also provide empirical evidence for Lusardi et al. (2017)’s conclusion that well-educated individuals gain from financial literacy education.

Keywords: Financial Literacy, Economic Outcomes, Treatment Effect Estimation, Machine Learning

JEL Classification: D1

Suggested Citation

Puelz, David and Puelz, Robert, Financial Literacy and Economic Outcomes (March 26, 2019). Available at SSRN: https://ssrn.com/abstract=3302978 or http://dx.doi.org/10.2139/ssrn.3302978

David Puelz (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Robert Puelz

Southern Methodist University (SMU) - Real Estate, Insurance, & Business Law Department ( email )

United States
214-768-4156 (Phone)
214-768-3713 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
41
Abstract Views
506
PlumX Metrics