If You're So Smart, Why Ain't You Rich?

In this working paper from the Harvard Business School, "If You Are So Smart, Why Aren’t You Rich? The Effects of Education, Financial Literacy and Cognitive Ability on Financial Market Participation," by Shawn Cole and Gauri Kartini Shastry, the authors examine factors that influence investor participation in financial markets. They find that one year of schooling increases the probability of financial market participation by 7-8% after holding other factors constant, such as income. They also find a positive correlation between cognitive abilities (smarts) and participation. Alternatively, they surprisingly discover that financial literacy programs have no impact on investor participation.