I develop a general equilibrium model in which the quality of household financial decisions is endogenously determined by the incentives to exert effort in learning about financial opportunities. The model generates predictions for asset market participation and returns across households....

Although consumer finance is a substantial element of the economy, it has had a smaller footprint within financial economics. In this review, I suggest a functional definition of the subfield of consumer finance, focusing on four key functions: payments, risk management, moving funds from today...

We assess investment sophistication in a large sample of auto-enrolled, retirement plan member choices. A strong preference for using a small number of investment options is provided with little evidence, overall, to support equally weighted allocations. However, when multiple options are...

The empirical evidence on rational inattention lags far behind the theoretical developments: micro evidence on the most immediate consequence of observation costs - the infrequent observation of state variables - is not available in standard datasets. We contribute to filling the gap with two...

This paper develops and estimates a dynamic model of stock market participation, where consumers' decisions regarding stock market participation are influenced by participation costs. The practical significance of the participation costs is considered as being a channel through which financial...

In this article, we review the literature on financial literacy, financial education, and consumer financial outcomes. We consider how financial literacy is measured in the current literature and examine how well the existing literature addresses whether financial education improves financial...

The aim of this paper is to understand what a recession means for individual consumers, and to model in a life-cycle framework how individuals respond to recessions. Our focus is on the sharp increase in savings rates that have been observed in the current and recent recessions. We show...

Carroll and Kimball (1996) show that the consumption function for an agent with time-separable, isoelastic preferences is concave in the presence of income uncertainty. In this paper I show that concavity breaks down if we abandon time-separability. Namely, if an agent maximizing an isoelastic...

China's over 25% aggregate household saving rate is one of the highest in the world. One popular view attributes the high saving rate to fast-rising housing prices in China. However, cross-sectional data do not show a significant relationship between housing prices and household saving rates....

This paper discusses three alternative assumptions concerning household preferences (altruism, self-interest, and a desire for dynasty building) and shows that these assumptions have very different implications for bequest motives and bequest division. After reviewing some of the literature on...