Comparative Advantage in the Household: Should One Person Specialize in a Household’s Financial Matters?

Pearson, Blain; Korankye, Thomas; Salehi, Hossein

doi:10.1007/s10834-021-09807-y

Cited by 4 publications

(8 citation statements)

References 25 publications

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“…The researchers found that FSE can explain the differences for varying emotional reactions to financial experiences. Other studies have also found positive associations between financial satisfaction and positive financial attitudes and beliefs (Aboagye and Jung, 2018;Hilgert et al, 2003;Joo and Grable, 2004;Pearson et al, 2021;Xiao et al, 2009).…”

Section: Financial Satisfactionmentioning

confidence: 88%

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The association between financial literacy confidence and financial satisfaction

Pearson

Korankye

2022

RBF

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PurposeThis study examines the association between financial literacy confidence and financial satisfaction. The authors posit that overconfident poor performers will experience greater levels of financial satisfaction and underconfident high performers will experience lower levels of financial satisfaction.Design/methodology/approachBased on the results of an objective financial literacy assessment and a subjective financial literacy assessment, variables measuring study participants' financial literacy overconfidence and financial literacy underconfidence are constructed. The variables are analyzed for their associations with financial satisfaction.FindingsThe results from the multivariate analysis suggest that financial literacy overconfidence (underconfidence) is associated positively (negatively) with higher levels of financial satisfaction and is associated negatively (positively) with lower levels of financial satisfaction.Practical implicationsThe discussion first highlights that to increase objective financial literacy, the disconnect between subjective financial literacy assessment and objective financial literacy must be recognized. Secondly, the discussion encourages financial literacy and education programs to incorporate behavioral education, which can provide learners with an awareness of the role of financial literacy confidence when making financial decisions.Originality/valueFinancial literacy overconfidence can result in an inability to recognize the realities of one's financial situation. Individuals who are overconfident in their level of financial literacy preformed lower on an objective assessment of their financial literacy, yet also tended to have a greater sense of financial satisfaction. This finding not only suggests that financial literacy overconfidence results in financial ineptitude, but also suggest that financial literacy overconfidence can result in specious conclusions regarding one's financial situation. The financial literacy underconfidence finding suggests that those who are financial literate, and who are also underconfident in their financial literacy, are less likely to have high financial satisfaction.

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Section: Financial Satisfactionmentioning

confidence: 88%

“…Other studies have also found positive associations between financial satisfaction and positive financial attitudes and beliefs (Aboagye and Jung, 2018; Hilgert et al. , 2003; Joo and Grable, 2004; Pearson et al. , 2021; Xiao et al.…”

Section: Introductionmentioning

confidence: 86%

The association between financial literacy confidence and financial satisfaction

Pearson

Korankye

2022

RBF

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“…The household production model suggests that engagement in financial management is done with the intent of increasing the well-being of the household. As suggested by Pearson et al (2021), the resulting increase in well-being can take many forms, such as increases in financial organization, ensuring on time bill payment, increases in asset returns, and better retirement preparation. This paper tests the hypothesis that engagement in financial management activities is associated positively with experiential well-being compared to other activities.…”

Section: Theoretical Motivationmentioning

confidence: 99%

“…The current study differs from Pearson et al (2021), which examined the relationship between household financial specialization and utility, as measured by financial, income, and life satisfaction. This study also differs from Baryła-Matejczuk et al (2020) which examined the association among financial management behaviors, life satisfaction, and relationship quality.…”

Section: Introductionmentioning

confidence: 99%

“…A key underpinning of these findings has been the recommendation for increased financial education to empower households to navigate the financial environment successfully (Barua et al 2018;Mitchell and Lusardi 2015;Pearson 2020). Others have also suggested intervention strategies, such as household members specializing in activities in which they have comparative advantage and outsourcing other goods and services from the market for financial advice (Pearson et al 2021). However, not all households are willing to seek, or are capable of seeking, financial advice, even when the engagement is beneficial (Finke 2013;Pearson 2022).…”

Section: Introductionmentioning

confidence: 99%

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Managing Household Finances: How Engaging in Financial Management Activities Relates to the Experiential Well-Being of Americans

Korankye

Pearson

2023

JRFM

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This study examines how engagement in financial management activities influences well-being using nationally representative data (N = approximately 30,000) from the U.S. Bureau of Labor Statistics’ American Time Use Survey and its associated Well-Being Modules. The current study estimates ordered probit models for several measures of experiential well-being, which consider how meaningful an activity is for a household and how happy, sad, tired, in pain, and stressed respondents felt during the activity. Controlling for a standard set of demographic and socioeconomic factors, the econometric results indicate that households report lower utility gains (lower happiness, greater sadness, and higher stress) when engaging in financial management activities relative to other activities. Furthermore, the results suggest increases in household time allocated toward performing financial management activities is associated with a lower (higher) likelihood of being very happy (very stressed) compared to other activities. The findings strongly indicate that households perceive financial management activities as vexing, reinforcing the need for financial stewardship support to promote household well-being.

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Student Debt and Healthcare Service Usage

Pearson¹,

Lee²

2022

Journal of Financial Counseling and Planning

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This study investigated the association between student debt and healthcare service usage utilizing pooled data collected from the 2015 to 2018 waves of the National Financial Capability Study. The findings of this study suggest that, when compared to those without student debt, student debt holders have a lower likelihood of filling prescriptions for medicine, going to a doctor or clinic when they have a medical problem, and going to medical tests, treatments, and follow-up appointments. The findings and ensuing discussion add to the mounting evidence of the many challenges associated with student debt repayment.

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Comparative Advantage in the Household: Should One Person Specialize in a Household’s Financial Matters?

Cited by 4 publications

References 25 publications

The association between financial literacy confidence and financial satisfaction

The association between financial literacy confidence and financial satisfaction

Managing Household Finances: How Engaging in Financial Management Activities Relates to the Experiential Well-Being of Americans

Student Debt and Healthcare Service Usage

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