Economic Education and Household Financial Outcomes during the Financial Crisis

Abstract

Using cross-sectional data from a nation-wide survey of American head-of-households conducted in the spring of 2010, we examined the ameliorating effects of economic literacy on the probability of specific household financial outcomes resulting from the 2008 financial crisis and the associated Great Recession. A series of probit regressions were estimated to capture the impact of economic literacy on the probability that households experienced job loss, delinquent mortgage payments, delinquent credit card payments, delinquent auto loan payments, loss of home, and personal bankruptcy. The head-of-household’s economic literacy was measured by the level of formal education received in economics and by the score achieved on an in-survey quiz of basic economic concepts and principles. The results indicate that realized quiz scores were correlated with the mitigation of job loss, late payment behavior, and personal bankruptcy, ceteris paribus. However, the results for the impact of formal economic coursework in school were mixed.

Households’ Financial Fragility During the COVID-19 Pandemic in Germany

“…My analyses consider objective and subjective aspects of financial knowledge and uncover a robust positive and significant association of financial literacy scores with the ability to cope with an unexpected expense. Besides, my results on the moderating effect of financial knowledge on the negative consequences of income losses relate to the findings of Bucher-Koenen and Ziegelmeyer (2013), Grimes et al (2021), andKlapper et al (2013), who analyze how financial literacy mitigated the negative financial consequences for households in the aftermath of the crisis of 2007/08.…”

Empowering students: Unleashing the impact of economic literacy and family education on economic decision-making, with a focus on economic rationality

“…Therefore, the attitudes and behaviors of children must receive special attention from parents, especially the economic behaviors that affect their lives as adults. Children's inability to live economically also causes parents to be forced to bear their future life even if they are adults and have a new family life (Grimes et al, 2021). Family economic education is economic education that is carried out within the family itself; family members provide financial learning to their children about the economy, starting from when they wake up until they return to sleep to carry out effective and efficient economic activities to meet their needs (Mayasari, 2019).…”

Verbraucherresilienz

“…Hinzu kommt, dass viele Menschen aufgrund einer erlebten wirtschaftli chen Unsicherheit gezwungen sind, ihren Konsum einzuschränken. So hat bereits die Finanzkrise 2008 viele Menschen in eine schwierige wirtschaftli che Lage gebracht (Grimes et al, 2021). Aktuell erleben viele Menschen die hohe Inflation und die steigenden Energiepreise aufgrund des Krieges in der Ukraine als große Verunsicherung (Mbah & Wasum, 2022).…”