Higher Education and Financial Behavior: The Effect of Studying Mathematics and Economics on Financial Outcomes
CEBI Working Paper 12/21
85 Pages Posted: 3 Dec 2019 Last revised: 12 May 2023
Date Written: May 11, 2023
Abstract
This paper documents how extensive economic education can reduce the risk of getting into financial trouble by comparing people who enter business and economics programs with people who enter other higher education programs. To identify the causal effect, I exploit GPA admission thresholds that quasi-randomize applicants near the thresholds into different higher education programs. I find that admission to an economics program reduces the probability of loan default and delinquency by one half. This large reduction is associated with changes in financial behavior, but it is not associated with differences in the level or stability of people’s income.
Keywords: Financial Problems, Education, Regression Discontinuity, Financial Literacy
JEL Classification: G51, G53, I23
Suggested Citation: Suggested Citation