Optimal Financial Knowledge and Wealth Inequality

We show that financial knowledge is a key determinant of wealth inequality in a stochastic life cycle model with endogenous financial knowledge accumulation, where financial knowledge enables individuals to better allocate lifetime resources in a world of uncertainty and imperfect insurance. Moreover, because of how the US social insurance system works, better-educated individuals have most to gain from investing in financial knowledge. Our parsimonious specification generates substantial wealth inequality relative to a one-asset saving model and one in which returns on wealth depend on portfolio composition alone. We estimate that 30–40 percent of retirement wealth inequality is accounted for by financial knowledge

Optimal Financial Literacy and Saving for Retirement

Recent studies show that financial literacy is strongly positively related to household wealth, but there is also substantial cross-sectional variation in both financial literacy and wealth levels. To explore these patterns, we develop a calibrated stochastic life cycle model which features endogeneous financial literacy accumulation. Our model generates substantial wealth inequality, over and above what standard lifecycle models produce. This is due to the fact that higher earners typically have more hump-shaped labor income profiles and lower retirement benefits which, when interacted with the precautionary saving motive, boosts their need for private wealth accumulation and thus financial literacy. We show that the fraction of the population which is rationally “financially ignorant” depends on the level of labor income uncertainty as well as the generosity of the retirement system

Assessing the Impact of Financial Education Programs: A Quantitative Model

Prior studies disagree regarding the effectiveness of financial education programs, especially those offered in the workplace. To explain such measurement differences in evaluation and outcomes, we employ a stochastic life cycle model with endogenous financial knowledge accumulation to investigate how financial education programs optimally shape wealth accumulation, financial knowledge, and participation in sophisticated assets (e.g. stocks) across heterogeneous consumers. We then apply conventional program evaluation econometric techniques to simulated data, distinguishing selection and treatment effects. We show that the more effective programs provide follow-up in order to sustain the knowledge acquired by employees via the program; in such an instance, financial education delivered to employees around the age of 40 can raise savings at retirement by close to 10%. By contrast, one-time education programs do produce short-term but few long-term effects. We also measure how accounting for selection affects estimates of program effectiveness on those who participate. Comparisons of participants and non participants can be misleading, even using a difference-in-difference strategy. Random program assignment is needed to evaluate program effects on those who participate

Using a Life Cycle Model to Evaluate Financial Literacy Program Effectiveness

Prior studies disagree regarding the effectiveness of financial literacy programs, especially those offered in the workplace. To explain such measurement differences in evaluation and outcomes, we employ a stochastic life cycle model with endogenous financial knowledge accumulation to investigate how financial education programs optimally shape key economic outcomes. This approach permits us to measure how such programs shape wealth accumulation, financial knowledge, and participation in sophisticated assets (e.g. stocks) across heterogeneous consumers. We then apply conventional program evaluation econometric techniques to simulated data, distinguishing selection and treatment effects. We show that the more effective programs provide follow-up in order to sustain the knowledge acquired by employees via the program; in such an instance, financial education delivered to employees around the age of 40 can raise savings at retirement by close to 10%. By contrast, one-time education programs do produce short-term but few long-term effects. We also measure how accounting for selection affects estimates of program effectiveness on those who participate. Comparisons of participants and non-participants can be misleading, even using a difference-in-difference strategy. Random program assignment is needed to evaluate program effects on those who participate

Illegal Substance Use among Italian High School Students: Trends over 11 Years (1999–2009)

Purpose: To monitor changes in habits in drug use among Italian high school students. Methods: Cross-sectional European School Survey Project on Alcohol and Other Drugs (ESPAD) carried out in Italy annually for 11 years (1999-2009) with representative samples of youth attending high school. The sample size considered ranges from 15,752 to 41,365 students and response rate ranged from 85.5% to 98.6%. Data were analyzed to obtain measures of life-time prevalence (LT), use in the last year (LY), use in the last 30 days (LM), frequent use. Comparisons utilized difference in proportion tests. Tests for linear trends in proportion were performed using the Royston p trend test. Results: When the time-averaged value was considered, cannabis (30% LT) was the most, and heroin the least (2%) frequently used, with cocaine (5%), hallucinogens (2%) and stimulants (2%) in between. A clear gender gap is evident for all drugs, more obvious for hallucinogens (average M/F LY prevalence ratio 2, range 1.7-2.4, p,0.05), less for cannabis (average M/F LY prevalence ratio 1.3, range 1.2-1.5, p,0.05). Data shows a change in trend between 2005 and 2008; in 2006 the trend for cannabis use and availability dropped and the price rose, while from 2005 cocaine and stimulant use prevalence showed a substantial increase and the price went down. After 2008 use of all substances seems to have decreased. Conclusions: Drug use is widespread among students in Italy, with cannabis being the most and heroin the least prevalent. Girls are less vulnerable than boys to illegal drug use. In recent years, a decrease in heroin use is overbalanced by a marked rise in hallucinogen and stimulant use.-

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TOULOUSE3-BU Santé-Centrale (315552105) / SudocTOULOUSE3-BU Santé-Allées (315552109) / SudocSudocFranceF

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