Carlos Fernando Avenancio-León is an assistant professor of finance at the University of California, San Diego. He is an economist whose work focuses on equitable finance, or the role of financial mechanisms in economic redistribution, and its implications for disadvantaged communities and inequality. His broad research interests include Finance, Labor Economics, and Public Finance. His broad legal interests include Empirical Legal Studies and Law of the Political Process. Previously, Avenancio-León was an assistant professor of finance in the Kelley School of Business and an affiliate of the Center for Research on Race and Ethnicity in Society at Indiana University Bloomington. Before that, he was a postdoctoral fellow and research scientist at the Massachusetts Institute of Technology’s Golub Center for Finance and Policy. Avenancio-León received a Ph.D. in finance from the University of California, Berkeley in 2018 and a J.D. from the University of Puerto Rico in 2011.
We document a nationwide “assessment gap” which leads local governments to place a disproportionate fiscal burden on racial and ethnic minorities. We show that holding taxing jurisdictions and property tax rates fixed, black and Hispanic residents face a 10–13% higher tax burden for the same bundle of public services. We decompose this inequality into between- and within- neighborhood components and find just over half of the inequality arises between neighborhoods. We then present evidence on mechanisms. Property assessments are less sensitive to neighborhood attributes than market prices are. This generates spatial variation in tax burden within jurisdiction, and leads to over-taxation of highly minority communities. We also find appeals behavior and appeals outcomes differ by race. Inequality does not arise from either (i) racial differences in transaction prices or (ii) price-regressivity in assessment ratios stemming from location-neutral features of the housing stock.
Alicia Lloro is a Senior Economist at the Federal Reserve Board of Governors, where she co-leads the Survey on Household Economics and Decision making (SHED). Prior to joining the Federal Reserve Board, Alicia worked on the FDIC Survey of Household Use of Banking and Financial Services. Alicia’s research interests include consumer finance, survey methodology, and econometrics. Alicia earned her PhD in Economics from the University of California, Irvine in 2013 and her BS in Engineering from Harvey Mudd College in 2002.
Anu Raijas (Ph.D., Adjunct Professor) works currently at the Bank of Finland as a financial literacy adviser. In 2020, she led the project in writing the first national strategy of financial education in Finland. Earlier she has worked among other organizations at the Finnish Competition and Consumer Authority, National Consumer Research Centre, the University of Helsinki. She has studied and led research projects about financial literacy, the structure and development of consumption, the financial decision-making of families and couples, the adequacy of basic security, and overindebtedness.
By the joint agreement of the Bank of Finland, the Ministry of Justice and other key authorities, the Bank of Finland initiated in February 2020 the coordination of activities related to the promotion of financial literacy and, based on this, prepared a proposal for a national strategy.
Finland’s national strategy for financial literacy is based on substantive facts and analyses. The strategy takes into account the starting level of Finns’ financial literacy, the conditions prevailing in the market and the societal situation. The strategy was created in close collaboration with key researchers and actors in the field. This will promote the adoption of the strategy, commitment to it, and acting in accordance with it. The OECD’s International Network on Financial Education (INFE) guidelines, and examples from other countries have been utilised in the financial literacy strategy.
The mission of Finland’s financial literacy strategy is to make people understand the importance of finances in their own lives and to act in their own finances in an ethical and sustainable way. The vision of the strategy is for Finns’ financial literacy to be the best in the world by 2030.
Improving the financial literacy of citizens will generate wellbeing for the whole national economy, for all of its sectors. For private individuals, this means that they are able to make good financial decisions and avoid difficulties with their finances.
The main steering instrument of the strategy is a function to be established in Finland that will help coordinate the work of dozens of private and third-sector actors in Finland, which is currently fragmented and partly duplicated. Through coordination, the promotion of financial literacy will become more systematic and goal-oriented, and it will monitor changes in the economic operating environment. When financial literacy work is done in the future in line with the strategy, resources will be used more efficiently, good practices will spread to be utilised by more actors, cooperation and synergy will be improved between different actors, and the effectiveness of activities will be increased.
To implement the strategy, a practical action plan will be prepared at national level, which will specify the measures to be undertaken, the actors implementing them and their timetables and goals. The plan will also agree on the division of responsibilities and cooperation. Although the quality and impartiality of work promoting financial literacy has been attended to well in Finland, it will also be important to ensure these aspects in future.
Easy-to-find and low-threshold advisory and information services should be established for selection and decision-making situations in citizens’ financial affairs. Actors engaged in work promoting financial literacy also need compiled, up-to-date information on actors, activities, data and materials.
The implementation of the strategy must be monitored and evaluated. This will be best achieved by evaluating the results and impacts of activities, as it is possible to verify them and to do so successfully also in the short term. Results and impacts must be measured systematically both on a general level as well as for individual target groups, projects and actions. The implementation of the national strategy for financial literacy requires the involvement of an interdisciplinary research community, which will ensure the development of research in the field.
The national strategy for financial literacy will have one owner, who will undertake to be responsible for the implementation of the strategy and enable the promotion of financial literacy in the network of actors. In Finland, the management of the financial literacy strategy is most naturally suited to the Ministry of Justice. The governance model for monitoring, controlling and coordinating the implementation of the financial literacy strategy must be light, but effectively serve the implementation of the strategy. A specific issue with regard to the strategy is the need to resolve the funding of activities, particularly for the third sector, and to establish and maintain a research network.
Dr. Vicki L. Bogan is an Associate Professor in the SC Johnson College of Business at Cornell University. Dr. Bogan is the founder and director of Cornell University’s Institute for Behavioral and Household Finance and she is a founding co-editor of the academic journal, Financial Planning Review. Her research interests are in the areas of financial economics, household finance, behavioral finance, and applied microeconomics centering on issues involving investment decision-making behavior and financial markets. Dr. Bogan’s impactful research has been published in leading economics and finance journals and she has testified before the U.S. House Committee on Financial Services on the gamification of finance. Dr. Bogan teaches finance courses for graduate and undergraduate students. She has received two outstanding educator awards and the SUNY Chancellor’s Award for Excellence in Teaching. Dr. Bogan holds a Sc.B. in Applied Mathematics and Economics from Brown University, an MBA in Finance and Strategic Management from the Wharton School of the University of Pennsylvania, an M.A. in Economics from Brown University, and a Ph.D. in Economics from Brown University. She also has held a visiting fellow appointment at Princeton University
We provide empirical evidence that visceral factors affect financial risk taking by showing that exposure to mass shootings alters mutual fund managers’ risk taking decisions. Funds that are exposed to mass shootings subsequently decrease risk relative to their peers. The effect that we document is temporary, lasting approximately one quarter before reverting to normal levels and is strongest among managers with demographics shown to express greater fear from mass shootings. Together with the literature on laboratory studies that show that market downturns induce fear, our findings suggest that fear could exacerbate variation in risk taking, generating the highly volatile countercyclical risk premiums shown to exist in markets.
Sasha Indarte is an Assistant Professor of Finance at the Wharton School of the University of Pennsylvania. Her primary areas of research are household finance, banking, and macroeconomics. Her research investigates the causes and consequences of financial distress and using big data, quasi-experimental research designs, and structural models. Her current research focuses on the drivers of personal bankruptcy, the effects of lender asset losses on the credit channel of monetary policy, and the impact of social insurance on household debt. She completed her PhD in Economics at Northwestern University in 2019.
This paper investigates how the expansion of social insurance affects households’ ac-cumulation of debt. Insurance can reduce reliance on debt by lessening the financial impact of adverse events like illness and job loss. But it can also weaken the motive to self-insure through savings, and households’ improved financial resilience can increase access to credit. Using two quasi-experimental research designs, we estimate the causal effect of expanded insurance on household debt, exploiting the staggered expansions of one of the largest US social insurance programs: Medicaid. We find that expanding Medicaid in-creased credit card borrowing by 2.2%. Decomposing this effect in a model of household borrowing, we show that increased credit supply in response to households’ improved financial resilience fully accounts for this rise in borrowing and contributed to 17% of the total welfare gains of expanding Medicaid.
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