Seminar: Household Finance (F)

Course content

How do households make important decisions about their finances and their spending? Household finance, which is at the intersection of Macroeconomics and Finance, is a young and growing field, which is not only interesting for academics but also for people working at policy institutions or in the financial sector.


Examples of topics and research questions studied in Household Finance include:


  • Stock market participation and portfolio choice: What determines households’ decision to invest in risky assets, and why is participation in equity markets so low? To what extent can participations costs, risk aversion, lack of trust, lack of awareness, liquidity constraints, background risk, or pessimistic expectations about stock returns and the likelihood of disasters explain low stock investment across households?
  • Saving and portfolios of the rich: How does savings behavior vary across the income and wealth distributions? Why do the rich invest so much in private businesses? And how does wealth affect investment in risky assets more generally?
  • Portfolio inertia and stock trading behavior: Is there inertia in household portfolios or do households over-trade, and do the same households engage in different behavior in different accounts (e.g. retirement accounts vs brokerage accounts)? What is the role of gender? How is inertia related to time-varying risk aversion? How do over-confidence and sensation-seeking affect trading behavior of households?
  • Social interactions: How do social interactions affect households’ decisions regarding saving for retirement, housing, debt, consumption, and stock investment? What are the identification challenges that arise when one attempts to measure peer effects, and how can they be addressed? Are peer effects beneficial or detrimental to welfare of households?
  • Financial literacy and financial education: How prevalent are financial mistakes of households, and how are they correlated with households’ financial literacy. What are the identification challenges in establishing a causal effect of financial literacy on financial outcomes? Can financial education improve financial literacy and thereby improve financial outcomes? Are there alternative ways to improve households’ financial decisions?
  • Housing, mortgages and the US financial crisis: What were the origins of the crisis in the US housing market that eventually turned into the financial crisis 2007/8? What were the roles of different groups of borrowers in driving the increase in mortgage debt and increase in defaults later on? What was the role of existing homeowners? What were the roles of foreclosures and strategic defaults?
  • Macroeconomic expectations: What is the role of expectations about inflation, stock returns, house prices or overall economic growth / income in driving the financial and consumption decisions of households? How are such expectations formed? What is the role of experiences? What can we learn from information provision experiments?

MSc programme in Economics

The seminar is primarily for students at the MSc of Economics


The course is a part of the financial line, signified by (F)

The seminar is primarily for students at the MSc of Economics.

Learning outcome

In addition to the learning outcome specified in the Curriculum the student is after completing the seminar expected to be able to:



  • Account for key research questions in the field of household finance.
  • Define the key concepts that are relevant for the broad question addressed in the seminar paper.
  • Understand the literature related to the topic.



  • Synthesize literature and gain an understaning of the key problems in a new field.
  • Evaluate how credibly empirical identification challenges of a particular problem have been addressed in an empirical study.
  • Discuss implications of particular research findings and how they inform the bigger picture of research in household finance and how they are relevant for practitioners.



  • Plan an independent research project in applied economics, including the selection of appropriate theoretical and empirical methods.
  • Identify challenges in the field of household finance that should be addressed by future research.
  • Implement an independent study on applied research questions, in paricular in the field of household finance.

- Kick-off meeting
- Finding literatur and defining the project
- Writing process of the seminar paper
- Presentation of own project and paper
- Giving constructive feedback to another student´s paper
- Actively participating in discussions at the presentations and other meetings.

At the seminar the student is trained independently to
- identify and clarify a problem,
- seek and select relevant literatur,
- write a academic paper,
- present and discuss own paper with the other students at the seminar.

The aim of the presentations is, that the student uses the presentation as an opportunity to practice oral skills and to receive feedback. The presentations is not a part of the exam and will not be assessed.

There is no weekly teaching/lecturing and the student cannot expect guidance from the teacher. If the teacher gives a few introduction lectures or gives the opportunity for guidance, this as well as other expectations are clarified at the kickoff meeting.

It is strongly recommended that you think about and search for a topic before the semester begins, as there is only a few weeks from the kick-off meeting to the submission of the project description/ agreement paper.

Before the presentations, your nearly finished version of the seminar project paper must be uploaded in Absalon, as the opponents and the other seminar participants have to read and comment on the paper. It is important that you upload a paper that is so finalized as possible due to the fact that the value of feedback and comments at the presentation is strongly associated with the skill level of the seminar paper.

After the presentations, you can with a few corrections improve the seminar paper by including the feedback and comments emerged during the presentations. It is NOT intended that you rewrite or begin the writing of the full project AFTER the presentation has taken place.

Students are expected to find relevant literature for their chosen topic.

A good starting point are the following review articles:


Students may want to consult one of the following textbooks if they find it necessary to gain some more background knowledge that goes beyond recent review papers:

  • “Household Portfolios“; Guiso, Luigi, Michael Haliassos, and Tullio Jappelli (Eds.); Cambridge, MA: MIT Press; 2001. ISBN-10: 0262072211
  • “Stockholding in Europe”; Guiso, Luigi, Michael Haliassos, and Tullio Jappelli (Eds.); Palgrave Macmillan; 2002; ISBN-10: 1403904715.
  • ”The Economics of Consumption: Theory and Evidence”; Tullio Jappelli and Luigi Pistaferri; Oxford University Press; 2017; ISBN-10: 0199383154.
  • “The Economics of Risk and Time “; Gollier, Christian; MIT Press; 2001; ISBN-10: 9780262572248.
  • “Strategic Asset Allocation: Portfolio Choice for Long-Term Investors”; Campbell, J.Y., Viceira, L.M.; New York: Oxford University Press; 2002; ISBN-10: 0198296940.
  • “The Economics of Consumer Credit “;  Bertola, G., Disney, R., and Grant, C. (Eds.); Cambridge, MA: MIT Press; 2006.

It is strongly recommended to have a basic knowledge of econometrics prior to taking the seminar. This includes knowledge of techniques such as Ordinary Least Squares or Instrumental Variables.

Basic knowledge of models of household consumption or portfolio choice helps but is no requirement to attend the course.

BSc in Economics or similar


Spring 2020:
• Kick-off meeting: Tuesday the 4th of February at 8.15-10.00
• Deadline of commitment paper: not later than March 1st at 10 AM
• Deadline of pre-paper upload in Absalon: A week before the presentations
• Presentations/Workshops: one to three days during 1st and 22th May. Exact dates will be agreed on at the kick-off meeting.

All information regarding the seminar is communicated through Absalon including venue. So it is very important that you by yourself logon to Absalon and read the information already when you are registered at the seminar.

Feedback by final exam (In addition to the grade)
7,5 ECTS
Type of assessment
Written examination
A seminar paper in English that meets the formal requirements for written papers stated in the curriculum and at KUNet for seminars.
All aids allowed

for the seminar paper.

The teacher defines the aids that must be used for the presentations.


Marking scale
7-point grading scale
Censorship form
External censorship
Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the seminar and can make use of the knowledge, skills and competencies listed in the learning outcomes in the Curriculum of the Master programme.


To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material.

  • Category
  • Hours
  • Project work
  • 186
  • Seminar
  • 20
  • English
  • 206