Business Education and Portfolio Returns

Adam Altmejd, Thomas Jansson () and Yigitcan Karabulut ()
Additional contact information
Thomas Jansson: Sveriges Riksbank
Yigitcan Karabulut: Frankfurt School of Finance and Management

No 16976, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using university admission cutoffs that generate exogenous variation in college-major choices, we provide causal evidence that enrollment in a business or economics program leads individuals to invest significantly more in the stock market, earn higher portfolio returns, and ultimately accumulate higher levels of wealth later in life. Underlying these effects, beyond differences in risk-taking, innate ability, labor market outcomes, or scale effects, is the enhanced ability of business educated individuals to acquire and process economic information and make informed investment decisions. Early investments in financial literacy thus play an important role in generating higher returns that significantly alter individuals' life-cycle wealth profiles.

Keywords: portfolio choice; financial literacy; portfolio returns; household wealth; returns to education; distribution of wealth (search for similar items in EconPapers)
JEL-codes: G11 G51 G53 I26 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2024-05
New Economics Papers: this item is included in nep-edu, nep-fle and nep-fmk
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