Exploring the Interplay of Cognitive Style and Demographics in Consumers' Financial Knowledge

Abstract

Despite substantial research and advances in consumers' financial knowledge, many Americans still lack basic financial skills. One overlooked research area is the relationships between consumers' cognitive style and subjective knowledge and objective knowledge, and how these relationships vary by demographics. Based on a nationwide study (n = 817), results indicate that consumers' perception of their subjective financial knowledge varies by cognitive style, with those consumers having an intuitive cognitive style, having a higher perception of their subjective financial knowledge than those who are more analytical. More nuanced results suggest that subjective knowledge is related to the interplay of cognitive style with demographics, whereas objective knowledge is not dependent on this interplay. These and other results illustrate that understanding nuances of financial knowledge is still of pressing importance to ensure consumer well‐being.

Financial Literacy, Behaviour and Well-Being of Millennials in Poland Compared to Previous Generations: The Insights from Three Large-Scale Surveys

“…However, the evidence from other studies and, especially, from developing countries as well as emerging economies (including CEE states), suggests that the inverted U-shaped pattern may not be universal (Cwynar, Cwynar, and Wais 2019). In some of these studies positive relationship has been established (Alhenawi and Elkhal 2013;Yakoboski, Lusardi, and Hasler 2018;Xiao, Chen, and Sun 2015;O'Connor 2019), while other found a negative association between age and financial literacy (Klapper, Lusardi, and Van Oudheusden 2015;Klapper and Panos 2011;Cwynar et al 2019b). These inconclusive results may indirectly imply a role for generation-specific factors in explaining financial literacy heterogeneity across generations.…”

Examining Antecedents of Health Insurance Literacy: The Role of Locus of Control, Cognitive Style, and Financial Knowledge

“…To address this gap, we draw from research that examined the association of psychographics with financial literacy (e.g., O'Connor ; Perry and Morris ), the association of financial literacy with HIL (McCormack et al ), as well as research in psychology (e.g., Hoorens and Buunk ; Judge and Bono ) to identify consumer characteristics that influence a consumer's HIL. We first consider how an individual's expectations of control (i.e., LOC) are related to their HIL.…”

“…Indeed, consumers' performance is driven by their confidence beliefs about individual competence (i.e., self‐efficacy) as well as their actual knowledge (Hadar, Sood, and Fox ; Xiao et al ). Though both dimensions of financial knowledge are related to performance, the constructs are distinct (O'Connor ), and do not always coincide (see Hadar, Sood, and Fox for a review). For example, “OK [objective knowledge] is more strongly related to ability and expertise, whereas SK [subjective knowledge] is more strongly related to product‐related experience and consumer's confidence in their ability to make effective decisions” (Hadar, Sood, and Fox , 305).…”

Impact of family income in early life on the financial independence of young adults: Evidence from a matched panel data

“…Postsecondary education is considered a solid financial investment in most people to harvest higher lifetime earnings, even considering the significant amount of student loan debt that a graduate accumulates in college (Webber, ). College degree holders are found to be associated with higher pay (Autor et al, ), more assets (Letkiewicz & Fox, ), homeownership (Letkiewicz & Heckman, ), lower unemployment rate (Cairo & Cajner, ), better health (Savelyev & Tan, ) and greater financial capability (Cui et al, ) or literacy (Fonseca et al, ; O'Connor, ), all of which contribute to the financial independence. In addition, compared with those who are in college, college graduates are older, no longer at school, more likely to be employed and thus more likely to be financially independent.…”

“…College education is considered a good investment in human capital. Compared with young adults without a college degree, college graduates generally do well in a number of aspects, such as earnings (Autor, Katz, & Kearney, ), assets (Letkiewicz & Fox, ), employment (Cairo & Cajner, ), health (Savelyev & Tan, ), financial capability (Cui, Xiao, & Yi, ) and literacy (Fonseca, Mullen, Zamarro, & Zissimopoulos, ; O'Connor, ), all of which contribute to the financial independence. To explore the effects of college attainment, we conducted analyses with the whole sample and subgroups with various college education statuses.…”