TY  - JOUR
AU  - Calvet,Laurent E.
AU  - Campbell,John Y.
AU  - Sodini,Paolo
TI  - Measuring the Financial Sophistication of Households
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14699
PY  - 2009
Y2  - February 2009
UR  - http://www.nber.org/papers/w14699
L1  - http://www.nber.org/papers/w14699.pdf
N1  - Author contact info:
Laurent E. Calvet
Department of Finance
HEC Paris
1 rue de la Libération
78351 Jouy en Josas
France
Tel: +33 13 967 9409
Fax: +33 13 967 7085
E-Mail: calvet@hec.fr

John Y. Campbell
Morton L. and Carole S.
Olshan Professor of Economics
Department of Economics
Harvard University
Littauer Center 213
Cambridge, MA 02138
Tel: 617/496-6448
Fax: 617/495-7730
E-Mail: john_campbell@harvard.edu

Paolo Sodini
Department of Finance
Stockholm School of Economics
Sveavägen 65
Box 6501
SE-113 83 Stockholm
Sweden
E-Mail: Paolo.Sodini@hhs.se
AB  - This paper constructs an index of financial sophistication that, in comprehensive data on Swedish households, best explains a set of three investment mistakes: underdiversification, risky share inertia, and the tendency to sell winning stocks and hold losing stocks (the disposition effect). The index of financial sophistication increases strongly with financial wealth and household size, and to a lesser extent with education and proxies for financial experience.  The index is strongly positively correlated with the share of risky assets held by a household.
ER  -