Details

Autor(en) / Beteiligte

• Lusardi, Annamaria
• Michaud, Pierre-Carl
• Mitchell, Olivia S.

Titel

Optimal Financial Knowledge and Wealth Inequality

Ist Teil von

• The Journal of political economy, 2017-04, Vol.125 (2), p.431-477

Ort / Verlag

United States: University of Chicago Press

Erscheinungsjahr

2017

Quelle

EBSCOhost Business Source Ultimate

Beschreibungen/Notizen

• 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.