IDEAS home Printed from https://ideas.repec.org/a/oup/rfinst/v27y2014i7p2022-2051..html
   My bibliography  Save this article

Smart Money? The Effect of Education on Financial Outcomes

Author

Listed:
  • Shawn Cole
  • Anna Paulson
  • Gauri Kartini Shastry

Abstract

Household financial decisions are important for household welfare, economic growth, and financial stability. Yet our understanding of the determinants of financial decision making is limited. Exploiting exogenous variation in state compulsory schooling laws in both standard and two-sample instrumental variable strategies, we show that education increases financial market participation, measured by investment income and equities ownership, while dramatically reducing the probability that an individual declares bankruptcy, experiences a foreclosure, or is delinquent on a loan. Further results and a simple calibration suggest that the result is driven by changes in savings or investment behavior, rather than simply increased labor earnings.

Suggested Citation

  • Shawn Cole & Anna Paulson & Gauri Kartini Shastry, 2014. "Smart Money? The Effect of Education on Financial Outcomes," The Review of Financial Studies, Society for Financial Studies, vol. 27(7), pages 2022-2051.
    • Handle: RePEc:oup:rfinst:v:27:y:2014:i:7:p:2022-2051.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/rfs/hhu012
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:rfinst:v:27:y:2014:i:7:p:2022-2051.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/sfsssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.