Cognitive Economics and Human Capital

A PSC Brown Bag Seminar

Robert Willis (Population Studies Center, Survey Research Center)

Monday, 10-20-2008.   ARCHIVED EVENT

Location: 6050 ISR Thompson St

Traditional economic models assume that individuals have full information and act perfectly rationally. However, we show that there is considerable variation in financial literacy in the population and propose modeling the acquisition of financial knowledge in a human capital
production framework. The model makes several predictions, notably with respect to portfolio choice. For example, it helps explain household non-participation in the stock market for some fraction of the population, and it provides guidance about the share of risky assets to hold for other types of households. Estimation of the human capital production function for financial knowledge on data from the Cognitive Economics Survey yields results that are consistent with important features of the model.

PSC Brown Bag seminars highlight recent research in population studies and serve as a focal point for building our research community.

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