Abstract
Financial driving licenses have the potential to improve consumer financial decision-making. The license approach presupposes the existence of a reliable mechanism to ex ante detect financially unskilled householders. This study tests that assumption by examining the empirical relationship between investment outcomes of investors and their qualification under a regulator-imposed assessment. On average, householders who qualify make fewer basic mistakes but still exhibit more subtle biases. The license weakly distinguishes composite aptitude, that is, vulnerability to serious losses. The high misclassification of households suggests regulators must be alert to the potential shortcomings of a financial driving license approach.
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