AØKK08392U Seminar: Household Finance (F)

Volume 2019/2020

MSc programme in Economics

The seminar is primarily for students at the MSc of Economics



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


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?
Learning Outcome




  • 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.

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.
BSc in Economics or similar
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.
- 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,






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.

  • Category
  • Hours
  • Project work
  • 186
  • Seminar
  • 20
  • Total
  • 206
Feedback by final exam (In addition to the grade)
7,5 ECTS
Type of assessment
Written examination
Exam registration requirements



All aids allowed

for the seminar paper.



Marking scale
7-point grading scale
Censorship form
External censorship
Exam period

Regular exam:

Spring 2020:

Deadline for submitting the final seminar paper: June 2, 2020 before 10 AM


Exam information:



More information about examination, rules, aids etc. at Master (UK) and Master (DK ).



Reexam information:




Criteria for exam assesment


