Unshrouding product-specific attributes through financial education

57 Pages Posted: 8 Feb 2020 Last revised: 23 Nov 2020

See all articles by Olga Balakina

Olga Balakina

Aarhus University

Vimal Balasubramaniam

Queen Mary University of London

Aditi Dimri

University of Warwick

Renuka Sane

National Institute of Public Finance and Policy

Date Written: November 23, 2020

Abstract

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

Balakina, Olga and Balasubramaniam, Vimal and Dimri, Aditi and Sane, Renuka, Unshrouding product-specific attributes through financial education (November 23, 2020). Available at SSRN: https://ssrn.com/abstract=3519845 or http://dx.doi.org/10.2139/ssrn.3519845

Olga Balakina

Aarhus University ( email )

Fuglesangs Allé 4
Aarhus V, 8210
Denmark

Vimal Balasubramaniam (Contact Author)

Queen Mary University of London ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
United Kingdom

Aditi Dimri

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Renuka Sane

National Institute of Public Finance and Policy ( email )

18/2, Satsang Vihar Marg
New Delhi, 110067
India

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