Debt Literacy and Debt Literacy Self‐Assessment: The Case of Poland

Abstract

It is well documented that financial literacy is at best moderate around the world and that the cost of ignorance in this field may be high on both microeconomic and macroeconomic levels. We surveyed a representative sample of Poles to measure their debt literacy—a little‐studied aspect of financial literacy—and therefore obtain insight into the factors predicting it. Our study evidenced low levels of debt literacy and its overestimation by respondents in their self‐reports. We also confirmed some of the patterns found in former studies, including the gender gap and a positive relationship between the level of educational attainment and debt literacy. Finally, our examination provides compelling outcomes with regard to the segmentation of the sample on the basis of objective and subjective debt literacy scores. They show large heterogeneity of debt literacy and thus confirm the need for far‐reaching customization of debt‐oriented education.

Sustainable Debt Behaviour and Well-Being of Young Adults: The Role of Parental Financial Socialisation Process

“…Secondly, perhaps those parents who were identified as active in teaching our respondents were unable to teach them successfully because of the low level of their own financial literacy. Such a view is supported by numerous studies pointing out significant shortcomings in financial literacy among adult Poles, especially in the oldest cohorts that can be matched to parents of our respondents (see, e.g., [84]).…”

“…Respondents' self-assessments of their debt-related knowledge (i.e., confidence) were measured with a 5-point Likert scale. This variable came from a survey item, used in many previous studies (e.g., [4,69,83,84]), that asked: 'On a scale of 1 to 5, where 1 means very low and 5 means very high, how would you assess your debt knowledge?' This question preceded the objective diagnosis of debt literacy.…”

Debt literacy and debt advice-seeking behaviour among Facebook users: the role of social networks

“…Moreover, from a cognitive perspective highly literate consumers may be more likely to have the Socratic 'I know that I know nothing' reflection: the ignorant is unaware of their shortcomings and, as a result, will not strive to eliminate the deficiency. Finally, many previous studies have found strong positive links between financial literacy and income (or wealth) (Cwynar et al, 2018;Hung, Parker, & Yoong, 2009;Klapper, Lusardi, & van Oudheusden, 2015;Lusardi & Tufano, 2015), suggesting that more literate individuals may have stronger incentives to look for financial adviceas predicted by the theory of Jappelli and Padula (2013)or may be more able to pay for advice (Collins, 2012).…”

“…Specifically, debt advice-seeking behaviour may be the subject to what individuals believe they know about credits, loans and debt management or, in other wordsto their debt-related confidence. Research indicates significant deviations of such confidence from actual debt literacy on the part of considerably many consumers (Cwynar, Cwynar, & Wais, 2018;Porto & Xiao, 2016;Xia, Wang, & Li, 2014).…”

Does Social Capital Influence Debt Literacy? The Case of Facebook Users in Poland

“…Debt literacy has been measured in Poland previously, including the channels through which consumers acquire the literacy. Cwynar et al (2018) surveyed a representative sample of adult Poles (N = 1,004) with a twelve-question 'true/false' test probing their debt literacy on a scale from −12 to 12. The mean test score in the total sample reached −1.22, meaning that the average grown-up Pole is actually debt-illiterate.…”