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2023/2024  BA-BHAAI1090U  Personal and Household Finance: from learning how to become rich, to designing public policies

English Title
Personal and Household Finance: from learning how to become rich, to designing public policies

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration Summer
Start time of the course Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Min. participants 30
Max. participants 100
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Carsten Sørensen - Department of Finance (FI)
For academic questions related to the course, please contact course responsible Rodrigo Zeidan (rze.fi@cbs.dk)
Main academic disciplines
  • Finance
  • Globalisation and international business
  • International political economy
Teaching methods
  • Face-to-face teaching
Last updated on 22-11-2023

Relevant links

Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors:
  • Understand intertemporal financial choices for poor and rich people.
  • Develop long-term financial strategies.
  • Grasp the fundamentals of pension fund, mortgages, digital currencies and other financial assets for long-term financial planning.
  • Develop critical perspectives on public policies on household finance in poor and rich countries.
  • Establish a solid cost/benefit framework for policies related to wealth and income inequality.
Course prerequisites
None but ideally students should have some basic knowledge of financial accounting or corporate finance, and micro or macroeconomics.
Personal and Household Finance: from learning how to become rich, to designing public policies:
Exam ECTS 7,5
Examination form Home assignment - written product
Individual or group exam Individual exam
Size of written product Max. 10 pages
Assignment type Written assignment
Release of assignment The Assignment is released in Digital Exam (DE) at exam start
Duration Written product to be submitted on specified date and time.
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Summer and Summer, Exam schedules available on https:/​/​www.cbs.dk/​en/​study/​cbs-summer-university/​courses-and-exams
Make-up exam/re-exam
Same examination form as the ordinary exam
Retake exam: 72-hour home project assignment, max. 10 pages, new exam question.
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Description of the exam procedure

Home assignment written in parallel with the course.

Course content, structure and pedagogical approach

Course content:

Financial education is lacking in most countries, developed countries included. The main goal of the course is to develop an integrated framework of household finance for private and public use. Students will learn how to maximize their intertemporal utility given their life-cycle income, how to become rich if they want to pay the price for it, how to save, borrow, and purchase property (and if they should do it at all), and more. In terms of public policy, students should leave the course with a holistic view of wealth and income inequality, how poverty restrict sound financial decision-making and how policies can improve social outcomes by reducing (or increasing!) income inequality. 
The first goal of the course is to develop a sound integrated framework for individuals to manage their finances with a long-term horizon in mind (based on the permanent income hypothesis). Such a framework does include learning how to integrate bitcoin and other digital currencies and derivatives in long-term portfolios (although that is not the main focus of the framework). Secondly, we will analyze the impact of credit restrictions and hyperbolic discounting in household financial management in poor and middle-income countries. Finally, we will investigate the role of public policy in improving household financial decisions. Importantly, household finance is stuck in low-value equilibria where people's inability to save and invest efficiently lead to lower productivity growth and value added for all. In this final module, we will explain the determinants of wealth and income inequality and how economic policies can improve social outcomes. 


Course structure:
Class 1 Life-cycle income hypothesis: do you want to be rich? 
Class 2 Financial markets and investment strategies. 
Class 3 Financial markets and investment strategies: should you buy a house? 
Class 4 Digital currencies and derivatives: leveraging at which cost? 
Class 5 Financial Literacy in poor and rich countries. 
Feedback: Approval of final paper. 
Class 6 Credit constraints, hyperbolic discounting and making choices while poor.  
Class 7 Poor economics and policymaking. 
Class 8 Wealth and income inequality. 
Class 9 Savings glut, pension funds and public policies in rich countries. 
Class 10 The Sustainability Credit Score System and green finance. 
Class 11 Comprehensive Review.

Description of the teaching methods
Tests, lecture notes, case studies, in class examples, worksheets, excel spreadsheets, and articles from financial press, which will form the basis for of the class discussions.
Feedback during the teaching period
Feedback will be constantly provided and the students will need to seek approval regarding the final topic of their action-based plan.
Student workload
Preliminary assignment 20 hours
Classroom attendance 38 hours
Preparation 121 hours
Midterm - Feedback activity 7 hours
Examination 20 hours
Further Information

6-week course.


Preliminary Assignment: The Nordic Nine pre-course is foundational for the summer university and identical for all bachelor courses. Students will receive an invitation with all details by the end of May. The assignment has two parts. 1.) online lectures and tutorials that student can access at their own time and 2.) one synchronous workshop which will be offered both online and in-person at several dates and times before the official start of the summer university courses. Sign-up is first come first serve. All students are expected to complete this assignment before classes begin.



Expected literature

Mandatory readings:

Milanovic, B. (2015). Global inequality of opportunity: How much of our income is determined by where we live?. Review of Economics and Statistics, 97(2), 452-460. 
Aguiar, M., & Hurst, E. (2016). Permanent-Income Hypothesis. The New Palgrave Dictionary of Economics, 1-5. 
Carlson, K., Kim, J., Lusardi, A., & Camerer, C. F. (2015). Bankruptcy rates among NFL players with short-lived income spikes. American Economic Review, 105(5), 381-84. 
Duflo's Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. Journal of Economic Literature, 50(1), 103-114. 
Planning for retirement: Long-term savings and investment in the UK. Blackrock.  
How People Plan for Retirement, by Anna Rappaport, Chairperson, Society of Actuaries Committee on Post-Retirement Needs and Risks 
Brown, M., Grigsby, J., Van Der Klaauw, W., Wen, J., & Zafar, B. (2016). Financial education and the debt behavior of the young. The Review of Financial Studies, 29(9), 2490-2522. Fixed-income derivatives made simple: What a trustee needs to know 
Banerjee, A. V., & Duflo, E. (2007). The economic lives of the poor. Journal of economic perspectives, 21(1), 141-168. 
Böhme, R., Christin, N., Edelman, B., & Moore, T. (2015). Bitcoin: Economics, technology, and governance. Journal of Economic Perspectives, 29(2), 213-38. Zeidan, R. (2018) Economics of Global Business, MIT Press, chapter 12. 
Guesmi, K., Saadi, S., Abid, I., & Ftiti, Z. (2019). Portfolio diversification with virtual currency: Evidence from bitcoin. International Review of Financial Analysis, 63, 431-437. Antonakakis, N., Chatziantoniou, I., & Gabauer, D. (2019). Cryptocurrency market contagion: market uncertainty, market complexity, and dynamic portfolios. Journal of International Financial Markets, 
Institutions and Money, 61, 37-51. 
Zeidan, R; Spitzeck, H. (2015) The Sustainability Delta: Considering Sustainability Opportunities in Firm Valuation, Sustainable Development, 23(6) 329-42. Lectures -8 and 9.   Zeidan, R.; Boechat, C.; Fleury, A. (2015). Developing a Sustainability Credit Score System. Journal of Business Ethics, 127 (283-296).


Additional relevant readings:

Cai, S., & Park, A. (2016). Permanent income and subjective well-being. Journal of Economic Behavior & Organization, 130, 298-319. 
Messy, F. A., & Monticone, C. (2016). Financial education policies in Asia and the Pacific. Retirement Planning From Start to Finish: Society of Actuaries. 
The global financial crisis and the evolution of markets, institutions and regulation, Journal of Banking & Finance 35, 502–511, (Moshirian, F., 2011).  
Brady, D., Giesselmann, M., Kohler, U., & Radenacker, A. (2018). How to measure and proxy permanent income: evidence from Germany and the US. The Journal of Economic Inequality, 16(3), 321-345. 
Milanovic, B. (2016). Global inequality: A new approach for the age of globalization. Harvard University Press. 
Shahzad, S. J. H., Bouri, E., Roubaud, D., & Kristoufek, L. (2019). Safe haven, hedge and diversification for G7 stock markets: Gold versus bitcoin. Economic Modelling 


Last updated on 22-11-2023