Unshrouding product-specific attributes through financial education
57 Pages Posted: 8 Feb 2020 Last revised: 23 Nov 2020
Date Written: November 23, 2020
We introduce financial education that helps potential retail consumers of a suboptimal insurance product with shrouded attributes ask the right questions, and provide rules of thumb to evaluate the
product. Our intervention reduces the potential demand for the suboptimal product. We use a model of shrouded attributes where financial education affects firms' incentives to reveal information and characterize the treatment effect size required for an unshrouded equilibrium. Statistically significant effects of financial education are a necessary, but not sufficient, condition to improve welfare in retail financial markets.
Keywords: financial education, financial literacy, household finance
JEL Classification: G22, G5, G52
Suggested Citation: Suggested Citation