Unshrouding product-specific attributes through financial education

We estimate the impact of a product-specific education video on the intention to purchase a shrouded, sub-optimal insurance product in India. Our intervention results in a significant decline in potential demand, preventing potential welfare losses to newly-informed consumers; however, these benefits may come at the cost of other myopic consumers if equilibrium outcomes remain unaltered by our intervention. Using a model of shrouded attributes with financial education, we characterize the size of treatment effects required to result in an unshrouded market equilibrium. Our approach increases the region of unshrouded equilibrium, albeit marginally. Positive effects of financial education may be necessary, but not a sufficient condition to improve overall welfare.

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