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Learning by Trading

Author

Listed:
  • Jha, Saumitra

    (Stanford University)

  • Shayo, Moses

    (Hebrew University of Jerusalem)

Abstract

How can we help individuals handle financial decisions in an increasingly complex environment? We explore an easily scalable avenue for improving financial understanding: learning by online trading in stocks. We randomly assign 1345 adults incentives and opportunities to trade stocks for 4-7 weeks, with no additional educational content. The treatment significantly improves financial literacy and attenuates the gender gap in self-assessed financial knowledge. Treated individuals are more likely to subsequently invest in stocks and less likely to seek external advice. The effects strengthen for those exposed to index funds, foreign assets, and rising or more volatile asset prices.

Suggested Citation

  • Jha, Saumitra & Shayo, Moses, 2018. "Learning by Trading," Research Papers 3673, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3673
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    File URL: https://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/461356
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    More about this item

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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