BA SEMINAR HOUSEHOLD FINANCE WINTERSEMESTER

Transcription

1 BA SEMINAR HOUSEHOLD FINANCE WINTERSEMESTER Prof. Michael Haliassos, Ph.D. Chair of Macroeconomics and Finance (Secretary: Ms. Nagel, Room: 3.48, HoF 3 rd Floor, Tel: ) [email protected] Office Hours (during Lecture Period): Monday, 15:00-16:00, Room 3.53, HoF Jian Li [email protected] Office Hours: Monday 16:00-18:00, HoF 3 rd Floor, Room 3.63 Eirini Tatsi [email protected] Office Hours: By appointment over , HoF 4 rd Floor, Room 4.13 This seminar presents topics in the modern and rapidly growing area of Household Finance, on the interface between Macroeconomics and Finance. This is not only an active area of frontier academic research, but also interesting and useful to people working in the financial sector, including central banks, commercial banks, insurance companies, and large brokers. The broad overall theme of the topics presented is household wealth management, namely analysis of household demand for assets and for loans. Gone are the days when household portfolios consisted of a bank account and a home for the vast majority of households. Households now build much more elaborate portfolios, not least in order to supplement the limited pension given by the social security system; and they are willing to undertake a lot more risk than before, sometimes with detrimental consequences, including financial crises. Understanding what determines household asset and debt choices and behavior is of paramount importance for academics and practitioners alike, and has been made much easier by the recent introduction of a number of data sources. The seminar should appeal to a wide range of students, from those interested in understanding household preferences regarding financial products that can be of use in financial sector jobs, to those who are more academically oriented and who want to study intertemporal portfolio selection in the face of uninsurable labor income risk. 1

2 Administrative Details This block seminar will take place on , from 14:00 to 18:30 in House of Finance, Room 1.28 (Shanghai). Presentations and papers should be in English. You will not be graded on the quality of your English, but you should know enough English to communicate your knowledge of the material to the instructors. There is an enrollment limit of 30 students for the course. Students will be arranged in pairs (or triplets, depending on the number of students enrolled) to prepare the presentation and the accompanying paper. The same grade will be awarded to all members of the team, reflecting quality of the presentation and of the paper. Therefore, it is the responsibility of team members to ensure that all of their partners do their fair share of work. There will be an organizational meeting on Monday from 13:30-15:00 in Room Deutsche Bank, House of Finance. The selection of seminar topic starts following this meeting, at 15:00 (see below). Important Dates 1. Monday from 13:30-15:00: Information meeting in Room Deutsche Bank, HoF. 2. Monday :00 to Monday , 12:00: to form team and select topic for the course (on a first-come, first-served basis): [email protected]). Please state 3 topics, in order of preference, as well as the name of your preferred partner. If you have already formed a pair, then there is no need for both members of the pair to send s. We reserve the right to assign partners, as necessary for completion of the teams. 3. Friday , 16:00: Final deadline for allocation of thesis topic and team. 4. Monday : Seminar Presentations 5. Monday : Submission deadline for the paper (presentation writeup). The paper should be ed and also submitted in hardcopy to Ms. Nagel by 12:00 noon. (This date is mandated by the deadline for submission of grades of the BA seminar that was decided by the School.) 2

3 TOPICS AND REFERENCES 1. What explains stock market non-participation? Are the same factors relevant for poorer and richer non-participants? Haliassos, Michael, Stockholding: Recent Lessons from Theory and Computations in Guiso, Luigi, Michael Haliassos, and Tullio Jappelli (Eds.), Stockholding in Europe, Palgrave Macmillan, Haliassos, Michael and Carol C. Bertaut, 1995, Why do so few hold stocks?, The Economic Journal, 105, Campbell, John Y. (2006). Household Finance, Journal of Finance, 61, (Available from: Luigi Guiso, Paola Sapienza and Luigi Zingales (2008) Trusting the Stock Market, Journal of Finance. Guiso Luigi and Tullio Jappelli (2005) Awareness and Stock Market Participation, Review of Finance. Dominitz, Jeff and Charles F. Manski (2007). "Expected Equity Returns and Portfolio Choice: Evidence from the Health and Retirement Study," Journal of the European Economic Association, vol. 5(2-3), pp Barberis, N., Huang, M. and Thaler, R. (2006). "Individual Preferences, Monetary Gambles, and Stock Market Participation: A Case for Narrow Framing", American Economic Review, 96, Do similar households in different countries hold similar portfolios? Christelis, Dimitris, Dimitris Georgarakos, and Michael Haliassos, Differences in Portfolios Across Countries: Economic Environment versus Household Characteristics, Review of Economics and Statistics, 95(1), March 2013, pp The Eurosystem Household Finance and Consumption Survey: Results from the First Wave, ECB Statistics Paper No. 2, April (Available from: Guiso, L., M. Haliassos and T. Jappelli, Introduction in Household Portfolios. 3

4 Guiso, L., M. Haliassos and T. Jappelli, Stockholding in Europe: Where Do We Stand and Where Do We Go?, Economic Policy, April 2003, Why do the rich invest so much in private businesses? Dynan, K., J. Skinner, and S. Zeldes, Do the Rich Save More?, Journal of Political Economy, vol. 112, pp Carroll, Chris, Portfolios of the Rich, in Household Portfolios. Nikolai Roussanov (2010). Diversification and its Discontents: Idiosyncratic and Entrepreneurial Risk in the Quest for Social Status, Journal of Finance. Wachter, Jessica A. and Motohiro Yogo (2010). Why Do Household Portfolio Shares Rise in Wealth?, Review of Financial Studies, 23(11): Heaton, John and Deborah Lucas, Portfolio Choice and Asset Prices: The Importance of Entrepreneurial Risk, Journal of Finance, 55, Do households overtrade in the stock market? Barber, B.M., Odean, T Trading is hazardous to your wealth: the common stock investment performance of individual investors. Journal of Finance, LV, Barber, Brad M. and Terrance Odean (2001). Boys will be Boys: Gender, Overconfidence, and Common Stock Investment, Quarterly Journal of Economics, 116, No. 1, Agnew, J., Balduzzi, P., Sundén, A. (2003). Portfolio choice and trading in a large 401(k) plan. American Economic Review, Bilias, Yannis, Dimitris Georgarakos, and Michael Haliassos (2010). Portfolio Inertia and Stock Market Fluctuations, Journal of Money, Credit and Banking, pp Grinblatt, Mark and Matti Keloharju (2001). What Makes Investors Trade?, Journal of Finance, LVI, Calvet, L., J.Y. Campbell, and P. Sodini (2009). Fight or Flight? Portfolio Rebalancing by Individual Investors, Quarterly Journal of Economics 124, pp

5 Keloharju Matti and Mark Grinblatt (2009). Sensation seeking, overconfidence, and trading activity, Journal of Finance, 64(2), Do US households borrow on credit cards only if they are in financial need? Bertaut, Carol C. and Michael Haliassos, Credit Cards: Facts and Theories, in Giuseppe Bertola, Richard Disney, and Charles Grant (Eds.), The Economics of Consumer Credit, Cambridge, MA: MIT Press, Gross, David B. and Nicholas S. Souleles (2002a). Do Liquidity Constraints and Interest Rates Matter for Consumer Behavior? Evidence from Credit Card Data, Quarterly Journal of Economics, Bertaut, Carol C., Michael Haliassos, and M. Reiter (2009). Credit Card Debt Puzzles and Debt Revolvers for Self-Control, Review of Finance, 13, Meier, Stephan, and Charles Sprenger. "Present-Biased Preferences and Credit Card Borrowing." American Economic Journal 2, no. 1 (2010): Gathergood, John and Joerg Weber (2012). Self-control, Financial Literacy, and the Co-holding Puzzle, Working paper. (Available from: Teluykova, Irina (2013). "Household Need for Liquidity and the Credit Card Debt Puzzle", Review of Economic Studies, 80(3), Laibson, David, Andrea Repetto, and Jeremy Tobacman (2004). A Debt Puzzle, in Philippe Aghion, Roman Frydman, Joseph Stiglitz, and Michael Woodford (Eds.), Knowledge, Information, and Expectations in Modern Economics: In Honor of Edmund S. Phelps. 6. Are household financial mistakes caused by financial illiteracy? Calvet LE, Campbell JY, Sodini P. (2009). Measuring the financial sophistication of households, American Economic Review, 99(2): Calvet, Laurent, John Y. Campbell, and Paolo Sodini (2007). Down or Out: Assessing the Welfare Costs of Household Investment Mistakes, Journal of Political Economy, 115, pp

6 Lusardi, Annamaria and Olivia S. Mitchell (2007). Baby Boomer Retirement Security: The roles of planning, financial literacy, and housing wealth, Journal of Monetary Economics, 54, Rooij, M. van, A. Lusardi and R. Alessie (2011), Financial literacy and stock market participation, Journal of Financial Economics, 101(2), pp Choi J, Laibson D, Madrian B. (2011). $100 bills on the sidewalk: suboptimal investment in 401(k) plans, Review of Economics and Statistics 93(3): Rooij, M. van, Lusardi A, Alessie R. (2012). Financial literacy, retirement planning, and wealth accumulation, Economic Journal, 122(5): Should we undertake financial education programs for households? Hastings, Justine, Brigitte Madrian, and William Skimmyhorn (2012). Financial Literacy, Financial Education, and Economic Outcomes, NBER Working Paper Lusardi, Annamaria and Olivia Mitchell (2007). Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education, Business Economics, vol. 42(1) pp (Available from Lusardi, Annamaria and Olivia Mitchell (2008). "Planning and Financial Literacy: How Do Women Fare?", American Economic Review, 98(2), pp Willis LE. (2011). The financial education fallacy, American Economic Review Papers and Proceedings, 101(3): Beshears J, Choi J, Laibson D, Madrian BC (2008). The importance of default options for retirement saving outcomes: evidence from the United States. In Lessons from Pension Reform in the Americas, ed. S. Kay, T. Sinha. pp Oxford: Oxford University Press. 8. Do social interactions influence portfolio choices? Hong, H., J. Kubik and J. Stein, Social Interaction and Stock-Market Participation, Journal of Finance 59 (2004),

7 Duflo, Esther, and Emmanuel Saez, "Participation and Investment Decisions in a Retirement Plan: the Influence of Colleagues' choices" with Esther Duflo, Journal of Public Economics, 85, 2002, Kuhn, P., Kooreman, P., A. Soetevent, and Kapteyn, A. (2011). The Effects of Lottery Prizes on Winners and Their Neighbors: Evidence from the Dutch Postcode Lottery, American Economic Review, 101, Georgarakos, Dimitris, Michael Haliassos, and Giacomo Pasini (2013). Household Debt and Social Interactions, Working Paper, conditionally accepted for the Review of Financial Studies (available from SSRN). Kaustia, M. and S. Knüpfer (forthcoming). Peer Performance and Stock Market Entry, Journal of Financial Economics. 9. Do financial advisors add value to investor accounts? Campbell J., Jackson H., Madrian B., and Tufano P. (2011). Consumer Financial Protection, Journal of Economic Perspectives. 25(1): Inderst, Roman and Marco Ottaviani (2009). Misselling Through Agents, American Economic Review. Hackethal, Andreas, Michael Haliassos, and Tullio Jappelli, Financial Advisors: A Case of Babysitters? (first draft: November 2008; final 2012), Journal of Banking and Finance, 36(2), Bhattacharya, U., Hackethal, A., Kaesler, S., Loos, B., and Meyer, S. (2012). Is Unbiased Financial Advice to Retail Investors Sufficient? Answers from a Large Field Study, Review of Financial Studies, 24, Mullainathan S., Noeth M., Shoar A. (2012). The market for financial advice: an audit study, NBER Working Paper Bergstresser, D., Chalmers, D. and Tufano, P. (2009). Assessing the Costs and Benefits of Brokers: A Preliminary Analysis of the Mutual Fund Industry, Review of Financial Studies, 22,

8 10. What makes households overborrow or default on loan payments? Gross, David B. and Nicholas S. Souleles (2002b). An Empirical Analysis of Personal Bankruptcy and Delinquency, The Review of Financial Studies, 15, Bertaut, Carol C. and Michael Haliassos, Credit Cards: Facts and Theories, in Giuseppe Bertola, Richard Disney, and Charles Grant (Eds.), The Economics of Consumer Credit, Cambridge, MA: MIT Press, Durkin, Thomas (2000). Credit Cards: Use and Consumer Attitudes, , Federal Reserve Bulletin, September, Lusardi A, Tufano P. (2009). Debt literacy, financial experiences, and overindebtedness, NBER Working Paper Fay, Scott, Eric Hurst, and Michelle White (2002). The Household Bankruptcy Decision, American Economic Review, 92, Gross, David B. and Nicholas S. Souleles (2002a). Do Liquidity Constraints and Interest Rates Matter for Consumer Behavior? Evidence from Credit Card Data, Quarterly Journal of Economics,