Abstract/Description

We introduce a new financial education that provides rules-of-thumb for consumers of a sub-optimal insurance product with shrouded attributes in India. Our intervention results in a significant decline in potential demand, improving welfare for newly-informed consumers. Using a model of shrouded attributes where financial education is linked to firms' incentives to reveal information, we further show that overall welfare depends on whether firms unshroud the information. We characterize the treatment effect size required for an unshrouded equilibrium, and conclude that significant effects of financial education are a necessary, but not a sufficient condition to improve welfare in retail financial markets.