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Journal ArticleDOI

An analysis of personal financial literacy among college students

01 Jan 1998-Financial Services Review (No longer published by Elsevier)-Vol. 7, Iss: 2, pp 107-128
TL;DR: In this paper, the authors surveyed 924 college students to examine their personal financial literacy; the relationship between the literacy and students' characteristics; and impact of the literacy on students' opinions and decisions; and concluded that less knowledgeable students tend to hold wrong opinions and make incorrect decisions.
About: This article is published in Financial Services Review.The article was published on 1998-01-01. It has received 1136 citations till now. The article focuses on the topics: Financial literacy & Literacy.
Citations
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Journal ArticleDOI
TL;DR: An assessment of a rapidly growing body of economic research on financial literacy and thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy are offered.
Abstract: This paper undertakes an assessment of a rapidly growing body of economic research on financial literacy. We start with an overview of theoretical research which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision-making in the United States and elsewhere. While the literature is still young, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy.

2,176 citations

Journal ArticleDOI
TL;DR: In this paper, the authors present an assessment of a rapidly growing body of economic research on financial literacy and examine the impact of financial literacy on economic decision-making in the United States and elsewhere.
Abstract: This paper undertakes an assessment of a rapidly growing body of economic research on financial literacy. We start with an overview of theoretical research, which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare, as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision making in the United States and elsewhere. While the literature is still young, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy. (JEL A20, D14, G11, I20, J26)

1,741 citations

Journal ArticleDOI
TL;DR: An overview of the meaning and measurement of financial literacy is presented to highlight current limitations and assist researchers in establishing standardized, commonly accepted financial literacy instruments as mentioned in this paper, which is essential to understand educational impact as well as barriers to effective financial choice.
Abstract: Financial literacy (or financial knowledge) is typically an input to model the need for financial education and explain variation in financial outcomes. Defining and appropriately measuring financial literacy is essential to understand educational impact as well as barriers to effective financial choice. This article summarizes the broad range of financial literacy measures used in research over the last decade. An overview of the meaning and measurement of financial literacy is presented to highlight current limitations and assist researchers in establishing standardized, commonly accepted financial literacy instruments.

1,164 citations

Journal ArticleDOI
TL;DR: Gneezy et al. as discussed by the authors conducted a meta-analysis of the relationship of financial literacy and of financial education to financial behaviors in 168 papers covering 201 prior studies, and found that interventions to improve financial literacy explain only 0.1% of the variance in financial behaviors studied, with weaker effects in low-income samples.
Abstract: Policy makers have embraced financial education as a necessary antidote to the increasing complexity of consumers' financial decisions over the last generation. We conduct a meta-analysis of the relationship of financial literacy and of financial education to financial behaviors in 168 papers covering 201 prior studies. We find that interventions to improve financial literacy explain only 0.1% of the variance in financial behaviors studied, with weaker effects in low-income samples. Like other education, financial education decays over time; even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention. Correlational studies that measure financial literacy find stronger associations with financial behaviors. We conduct three empirical studies, and we find that the partial effects of financial literacy diminish dramatically when one controls for psychological traits that have been omitted in prior research or when one uses an instrument for financial literacy to control for omitted variables. Financial education as studied to date has serious limitations that have been masked by the apparently larger effects in correlational studies. We envisage a reduced role for financial education that is not elaborated or acted upon soon afterward. We suggest a real but narrower role for “just-in-time” financial education tied to specific behaviors it intends to help. We conclude with a discussion of the characteristics of behaviors that might affect the policy maker's mix of financial education, choice architecture, and regulation as tools to help consumer financial behavior. This paper was accepted by Uri Gneezy, behavioral economics.

948 citations

Journal ArticleDOI
TL;DR: An overview of the meaning and measurement of financial literacy is presented to highlight current limitations and assist researchers in establishing standardized, commonly accepted financial literacy instruments as mentioned in this paper, which is essential to understand educational impact as well as barriers to effective financial choice.
Abstract: Financial literacy (or financial knowledge) is typically an input to model the need for financial education and explain variation in financial outcomes. Defining and appropriately measuring financial literacy is essential to understand educational impact as well as barriers to effective financial choice. This article summarizes the broad range of financial literacy measures used in research over the last decade. An overview of the meaning and measurement of financial literacy is presented to highlight current limitations and assist researchers in establishing standardized, commonly accepted financial literacy instruments.

948 citations

References
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Journal Article

189 citations


"An analysis of personal financial l..." refers background or result in this paper

  • ...Most of the higher education institutions put little emphasis on students ' personal finance education ( Danes & Hira , 1987 ) ....

    [...]

  • ...Consistent with the existing literature (Danes & Hira, 1987; Volpe, Chen, & Pavlicko, 1996), the mean percentage of correct scores is grouped into (1) more than 80%, (2) 60% to 79%, and (3) below 60%....

    [...]

Journal ArticleDOI
TL;DR: In this paper, the authors compared men and women on two concepts, self-perceived knowledge or what one thinks one knows about some topic and real or actual knowledge of that topic.
Abstract: The purpose of this study was to compare men and women on two concepts, self-perceived knowledge or what one thinks one knows about some topic and real or actual knowledge of that topic. A survey of 457 students showed that the men (n = 234) claimed to know more about financial investments than the women (n = 223) and also scored higher than the women on a test of real investment knowledge. About the same proportions of both sexes reported current ownership of savings accounts, stocks, and bonds, but men reported more plans to own stocks and bonds than women.

95 citations


"An analysis of personal financial l..." refers result in this paper

  • ...Total 358 100% 544 100% Z Z t " t~ < < , , o 7~ o¢ Financial Literacy 121 The finding that women score lower than men is consistent with the existing literature ( Genasci , 1995 ; Goldsmith & Goldsmith , 1997 ; HSR , 1993 ; Lewin , 1995 ; Martinez , 1994 ; Volpe , Chen , & Pavlicko , 1996 ; ) ....

    [...]

Journal ArticleDOI
Abstract: A number of states require or are considering the required teaching of consumer education in secondary schools. However, almost all previous research has found no difference in consumer economic competency between students who had taken a consumer education/economics course and students who had not taken the course. This research was conducted in a state that requires consumer education of all students to see if there was a change in competency level and attitudes toward business. Potential differences in types of courses used to meet the state requirements were also investigated. The basic finding is that students who took a course specifically designed to present consumer education topics did improve their consumer economics competency and developed a more positive attitude toward business.

50 citations