The Household Head's Educational Level and Financial Decision-Making

Abstract

This paper addresses the pressing need for diversification in financial asset choices among Chinese households, in alignment with the ongoing reforms in the education system. It examines the influence of the educational attainment of the household head on family financial decision-making. Drawing on microdata from the 2013 China Household Finance Survey (CHFS), the study reveals a significant correlation between the educational level of the household head and the diversity of family financial asset selections, with these findings remaining robust across various tests. The study also notes regional and household registration-based disparities in financial asset preferences. Crucially, the educational level of the household head appears to enhance financial asset selection predominantly by elevating family income. Moreover, a propensity for risk-taking is found to facilitate more educated households in diversifying their financial assets. This research underscores the pivotal role of the household head's education in shaping family financial choices, offering insightful implications for fostering high-quality development in both the educational and financial sectors.