Unshrouding product-specific attributes through financial education

53 Pages Posted: 8 Feb 2020 Last revised: 17 Aug 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: August 17, 2020

Abstract

We estimate the impact of a product-specific education video on the intention to purchase a shrouded, sub-optimal insurance product in India. Our intervention results in a significant decline in potential demand, preventing welfare losses to newly-informed consumers; however, these benefits may come at the cost of other non-educated consumers if equilibrium outcomes remain unaltered by our intervention. Using a model of shrouded attributes in product markets with financial education, we characterize the size of treatment effects required to result in an unshrouded market equilibrium. Only for a narrow set of parameter values, our experiment results in a market equilibrium with fair prices. Positive effects of financial education may be necessary, but not a sufficient condition to improve overall 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 (August 17, 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

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
88
Abstract Views
575
rank
319,591
PlumX Metrics