DP20422 The Production of Financial Literacy
George Mihalcea
We study the dynamic formation of financial competencies and show that their accrual over the life cycle does not necessarily align with educational attainment. While richer and educated households are, on average, more financially literate, the accumulation of skills varies significantly with risk tolerance and experimentation. Using data on wealth and portfolio returns, we estimate that the accumulation of financial skills over the life cycle accounts for 1/5 of cross-sectional wealth
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