In this paper we investigate how age affects the self-reported level of life satisfaction among the elderly in Europe. By using a vignette approach, we find evidence that age influences life satisfaction through two counterbalancing channels. On the one hand, controlling for the effects of all other variables, the own perceived level of life satisfaction increases with age. On the other hand, given the same true level of life satisfaction, older respondents are more likely to rank themselves as “dissatisfied” with their life than younger individuals. Detrimental health conditions and physical limitations play a crucial role in explaining scale biases in the reporting style of older individuals.

Self-reported life satisfaction is highly heterogeneous across similar countries. We show that this phenomenon can by largely explained by the fact that individuals adopt different scales and benchmarks in evaluating themselves. Using a cross sectional dataset on individuals aged 50 and over in ten European countries, we compare estimates from an Ordered Probit in which life satisfaction scales are invariant across respondents with those from a Hopit model in which vignettes are used to correct for individual-specific scale biases. We find that variations in response scales explain a large part of the differences found in raw data. Moreover, the cross countries ranking in life satisfaction dramatically depends on scale biases.JEL classification: C42, D12, I31, J14.

We investigate the role of response consistency in the dynamics of reporting work disability. Using the 2004 and 2006 waves of the Survey of Health, Ageing and Retirement in Europe, we document that in Europe surprisingly large fractions of individuals change their self-reported disability status within 2 years.We find that these dynamics can be largely explained by the fact that respondents change the way that they evaluate the severity of work disability problems over time

Parental socio-economic background plays an important role in determining employment outcomes during the individual’s whole life-cycle. Indeed, the environment in which individuals grow up plays a crucial role in determining their later socio-economic condition, regardless of their own abilities. On the one hand, this link might be due to the transmission of social norms (e.g. work ethics) or risk attitudes from parents to children. On the other hand, public policies may strengthen or weaken cross-generational persistence in the socio-economic status

This paper analyses the relationship between dispositional optimism and stock investments. Data are drawn from the second wave of the Survey of Health, Ageing and Retirement in Europe. Dispositional optimism is found to be a relevant predictor of the ownership of stocks as well as of the share of gross financial wealth invested in this asset. The role of dispositional optimism is found to be stronger for risk tolerant agents and its relationship with the share of wealth invested in stocks varies with agents' trust. KeywordsDispositional Optimism, Household finance, Saving behaviour JEL classification: D14; G02; G11. JEL Codes D14, G02, G11

Based on a sample of university students, we provide evidence that a small-scale training intervention has both a statistically and economically significant effect on subjective and objective assessments of financial knowledge. We also show that the intervention increases self-assessed more than actual financial knowledge. The intervention consists of measuring financial literacy before and after a small on-line course and is administered through an on-line platform.

A large and growing literature documents that a large fraction of the population lacks of the basic skills to make sound financial decisions. This evidence has prompted a number of financial education initiatives around the world. These initiatives often take the form of education programs, but are rarely designed to be evaluated. A first urgent question is whether financial education is actually effective in enhancing the level of financial literacy.Using an evaluation design, our experiment studies the effect of financial education on financial literacy, investment attitudes and on how individuals perceive their level of financial literacy. To remove the effect of potentially important confounders, we run the same experiment in the field and in the laboratory.Our evidence shows a non-negligible effect on financial literacy and investment attitude, but an even larger effect on the degree of self-assessed financial literacy in the population of university students. The exercise thus uncovers an interesting pattern: financial education seems to improve more what individuals think to know than what individuals actually know.The results suggest that, while being able to increase financial literacy, financial education programs can also cause individuals to become more confident in their abilities without actually being more equipped to face financial decisions. Our results imply an important warning on the effectiveness of financial education initiatives. The increase in self-confidence seems to be a necessary by-product of financial education. An extremely polluting by-product, if the increase in self-confidence is not matched by the improvement in actual skills. Financial education, literacy and investment attitudesAbstract Based on a sample of university students, we provide field and laboratory evidence that a small scale training intervention has a both statistically and economically significant effect on subjective and objective assessments of financial knowledge. We also show that for a large part of students whose self-assessed financial knowledge has improved we do not find an increase in their actual skills.

This paper analyses the relationship between dispositional optimism and stock investments. Data are drawn from the second wave of the Survey of Health, Ageing and Retirement in Europe. Dispositional optimism is found to be a relevant predictor of the ownership of stocks as well as of the share of gross financial wealth invested in this asset. The role of dispositional optimism is found to be stronger for risk tolerant agents and its relationship with the share of wealth invested in stocks varies with agents' trust. KeywordsDispositional Optimism, Household finance, Saving behaviour JEL classification: D14; G02; G11. JEL Codes D14, G02, G11