Abstract: We quantify redistribution between consumers in financial markets comparing cards with and without rewards. Regardless of income, sophisticated individuals profit from reward cards at the expense of naive consumers. We exploit bank-initiated account limit increases to show that reward cards induce more spending, leaving naive consumers with higher unpaid balances. Naive consumers repay credit cards following a sub-optimal balance-matching heuristic and incur higher costs. Banks incentivize the use of reward cards offering lower rates. We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing disparities.

(Working Paper - January 2024) 

Coverage: Economist, New York Times, Washington Post, Financial Times, Wall Street Journal, Politico, Fortune, Bloomberg (Wealth Economics), Bloomberg (Opinion), Vox, Forbes, CEPR VoxTalks (podcast), CNBC (with video), Business Insider, Marginal Revolution, Quartz, Motley Fool, View from the Wing, The Lever, Retail Industry Leaders Association

Conference and Seminar Presentations: WFA Meeting 2023 (US), SFS Cavalcade 2023 (US), FIRS Conference 2022 (Hungary), 16th Swiss Winter Conference on Financial Intermediation (Switzerland), 2022 University of British Columbia Winter Finance Conference (Canada), IMF (US), Federal Reserve Board (US), 15th Queen Mary Behavioral Finance Working Group Conference (UK), 5th Bristol Banking Workshop (UK), European University Institute (Italy), 37th European Economic Association Meeting (Italy), 4rd VU Amsterdam Conference on Research in Behavioral Finance (Netherlands), 2022 IWFSAS (UK), Nova SBE (Portugal), George Washington University (US), World Bank (US), 4th Philadelphia Fed CFI Workshop on Payments, Lending, and Innovations in Consumer Finance (US), Bank of Portugal (Portugal), University of Luxembourg (Luxembourg), 3rd Georgia State CEAR/HEC Montreal RSI Household Finance Workshop (Canada), Federal Reserve/George Washington University Financial Literacy Seminar (US)

Abstract: Hegemonic countries safeguard their dominant position by maintaining technological leadership. To this end, the U.S. has imposed export controls to restrict China’s access to strategic, cutting-edge technologies. We document that these measures lead to an immediate, broad-based decoupling of supply chains, with U.S. suppliers more likely to end relations with Chinese customers—even those not directly targeted by the policy. However, we find no evidence of reshoring or friend-shoring in U.S. supply chains. Due to these disruptions, affected U.S. suppliers experience a $130 billion decline in market capitalization, along with reductions in profitability and employment.

(Working Paper - November 2024)

Coverage:  New York Times, NY Fed Liberty Street Economics, CNN, Bloomberg, Barron's, Marginal Revolution, CSIS

Conference and Seminar Presentations: 2024 Columbia University Global Capital Allocation Project Annual Conference (US), 2023 Kiel Institute and CEPR Joint Conference (Germany), CEPR–Bocconi Geoeconomics Junior Workshop (Italy), Center for Strategic and International Studies Geoeconomic Meeting (US), European Central Bank (Germany), and University of Connecticut (US)

Abstract: Financial education is a key priority of the policy agenda aimed at fostering financial inclusion and enhancing economic and development outcomes. While academic research on the impact of financial education on financial knowledge and decisions have been rapidly expanding, most of the evidence focuses on low-income individuals and developing economies (Kaiser, Lusardi, Menkhoff, and Urban, 2022). However, having the necessary knowledge, skills, and attitudes to make good financial decisions is not just relevant for this group of people or countries. For instance, a recent survey conducted by the European Commission highlighted the urgent need to improve financial literacy in the European Union (EU), with only 18 percent of citizens demonstrating a high level of financial literacy (European Commission, 2023). In this project, we have the ideal setting to conduct a randomized controlled trial (RCT) on financial education in a developed OECD country (Portugal), targeting mainly middle-income individuals, with the adults spread throughout the country. Indeed, Portugal ranked last among EU members in the latest European Commission’s financial literacy ranking, and national authorities such as the country’s central bank (Banco de Portugal) and other government agencies have put forward different strategies to increase financial and digital literacy levels. We plan to conduct an RCT using a financial literacy program named “Finanças para Todos” (i.e., Finance for All) to be implemented by the Finance Knowledge Center of the Nova School of Business and Economics. A pilot of the program took place during the 2022/2023 academic year, which had around 700 participants attending in person or online and was highly successful in terms of demand for the program and feedback received. Our experimental design consists of randomly allocating participants to a treatment group that is assigned to attend the financial literacy program (in-person or online format) or a control group that is not assigned to attend the training. All individuals in the sample had previously self-enrolled into the program following an outreach campaign using different news outlets in the country. Our sample consists of over 5200 participants of which 66% are women, 74% have attained some higher education level, 76% have some type of credit product, and 44% have a household income higher than 2000EUR. The average age is 40 years. 

(RCT in Progress - AEA RCT Registry)