Financial Literacy and Credit Card Behaviors: A Cross-Sectional Analysis by Age

Allgood, Sam; Walstad, William B.

doi:10.5038/1936-4660.6.2.3

Cited by 101 publications

(148 citation statements)

References 20 publications

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“…Moreover, both self-assessed and actual literacy is found to have an effect on credit card behavior over the life cycle (Allgood and Walstad, 2013). A particularly well-executed study by Gerardi, Goette, and Meier (2013) matched individual measures of numerical ability to administrative records that provide information on subprime mortgage holders’ payments.…”

Section: How Does Financial Literacy Matter?mentioning

confidence: 99%

The Economic Importance of Financial Literacy: Theory and Evidence

Lusardi

Mitchell

2014

Journal of Economic Literature

2,987

909

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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.

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Section: How Does Financial Literacy Matter?mentioning

confidence: 99%

The Economic Importance of Financial Literacy: Theory and Evidence

Lusardi

Mitchell

2014

Journal of Economic Literature

2,987

909

View full text Add to dashboard Cite

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“…Other recent studies document that individuals with low levels of financial literacy are significantly less likely to use their credit cards efficiently (e.g., Lusardi and Tufano 2015;Mottola 2013;Allgood and Walstad 2013). Analyzing U.S. adults, Allgood and Walstad (2013) find a robust negative relation between financial literacy and costly credit card practices.…”

Section: Costly Credit Card Practices and Excessive Debt Accumulationmentioning

confidence: 99%

Financial literacy, financial advice, and financial behavior

2017

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In this survey, we review the voluminous body of literature on the measurement and the determinants of financial literacy. Wherever possible, we supplement existing findings with recent descriptive evidence of German households' financial literacy levels based on the novel Panel on Household Finances dataset, a large-scale survey administered by the Deutsche Bundesbank and representative of the financial situation of households in Germany. Prior research not only documents generally low levels of financial literacy but also finds large heterogeneity in financial literacy across the population, suggesting that economically vulnerable groups are placed at further disadvantage by their lack of financial knowledge. In addition, we assess the literature evaluating financial education as a means to improve financial literacy and financial behavior. Our survey suggests that the evidence with respect to the effectiveness of the programs is rather disappointing. We also review the role of individuals' financial literacy for the use of professional financial advice and assess whether expert intervention can serve as a substitute to financial literacy. We conclude by discussing several directions for future research.

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“…Subjective financial literacy is the financial knowledge level self-evaluated by consumers themselves. Both objective and subjective financial literacy factors were used to predict financial behavior (Robb and Woodyard, 2011;Xiao et al, 2011;Allgood and Walstad, 2013). Lusardi et al (2010) developed a theoretical model of retirement saving behavior that considers the role of financial literacy.…”

Section: Theoretical Framework and Hypothesesmentioning

confidence: 99%

Age differences in consumer financial capability

Xiao

Chen

Sun

2015

Int J Consumer Studies

132

146

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The purpose of this study is to examine age differences in financial capability. Financial capability is measured by five variables: objective financial literacy, subjective financial literacy, desirable financial behavior, perceived financial capability, and a financial capability index. Financial capability is expected to increase with age. Specifically, we expect older consumers to demonstrate higher levels of both objective and subjective financial literacy, more desirable financial behaviors, a higher level of perceived financial capability, and a higher score on the financial capability index. Data from the 2012 National Financial Capability Study in the U.S. was used to examine the associations between age groups and financial capability variables. One-way ANOVAs were used to examine age differences in financial capability variables. Then multiple regressions were used to examine age differences after controlling for socio-demographic and financial variables. The results indicated that age differences in four financial capability variables showed similar patterns. Young adults aged 18-24 had the lowest scores on objective financial literacy, subjective financial literacy, perceived financial capability, and the financial capability index. The results have implications for consumer educators to provide effective financial education for all age groups.

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Financial Literacy and Credit Card Behaviors: A Cross-Sectional Analysis by Age

Cited by 101 publications

References 20 publications

The Economic Importance of Financial Literacy: Theory and Evidence

The Economic Importance of Financial Literacy: Theory and Evidence

Financial literacy, financial advice, and financial behavior

Age differences in consumer financial capability

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