Job Market Paper
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.
VoxEU] [NBER Digest]
We link survey data containing Danish people’s perceptions of where they rank in various reference groups and fairness views with administrative records on their income history, life events, and reference groups. People know their income positions well, but believe others are closer to themselves than they really are. The perceived fairness of inequalities is strongly related to current social position, moves with shocks to social position (e.g., unemployment or promotions), and changes when people are experimentally shown their actual positions. People view inequalities within education group and co-workers as most unfair, but underestimate inequality the most exactly within these reference groups.
Work in progress