Job Market Paper
Abstract: Households’ financial problems can have important welfare and macroeconomic consequences. Economic education of the youth is often suggested as a way to improve financial decision making. This paper provides the first evidence on how field of study in higher education affects the probability of getting into in financial problems and, in particular, if studying economics can reduce the risk of default. To identify the causal effects of field of study, I use a fuzzy regression discontinuity design where I exploit GPA thresholds in the Danish system of admission to higher education. I find that being admitted to the Business and economics field of study significantly decreases the probability of experiencing default 10 years after the year of application or later. I present evidence that this is not due to a higher level of income or less volatile income but due to debt and a lower probability of being liquidity constrained.
Abstract: How well do people know their own social positions and that of others and how does it shape their views about the fairness of unequal outcomes? We provide new answers to these long-standing questions by linking survey and experimental responses on perceptions and attitudes for a large sample of the Danish population to administrative records with detailed information on incomes and their histories. Our detailed set of findings can be summarized in three main points: First, people underestimate the degree of inequality by believing that others are closer to themselves than they really are, but the misperceptions are not large. Second, fairness views on inequality strongly correlates with social position of the individual, and we provide multiple pieces of evidence pointing to a causal relationship. Third, people view inequality within their education group and co-workers to be most unfair. Yet, it is exactly in these dimensions that people generally underestimate the degree of inequality and within which lower-income people strongly overestimate their own position.
Work in progress