Financial literacy, confidence and financial advice seeking

Kramer, Marc

doi:10.1016/j.jebo.2016.08.016

Cited by 171 publications

(148 citation statements)

References 57 publications

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“…2 Our results hence lend themselves to more detailed interpretations than earlier work that use dummy variables to categorize respondents into the groups of over-oder underconfident individuals (Allgood and Walstad, 2016;Kramer, 2016;Bannier and Neubert (2016)). …”

Section: Introductionmentioning

confidence: 72%

“…We therefore follow Kramer (2016), who also uses measures of financial confidence as a central explanatory factor in his models, but only instruments financial literacy in his attempt to deal with endogeneity problems. 12 Economics education has been successfully employed as an instrument in the studies by Kramer (2016) and Lusardi and Mitchell (2007b).…”

Section: Endogeneity Effectsmentioning

confidence: 99%

“…12 Economics education has been successfully employed as an instrument in the studies by Kramer (2016) and Lusardi and Mitchell (2007b). 13 Compare Binswanger and Carman (2012) who also use an over-identified IV model to address endogeneity concerns with regard to planning behavior.…”

Section: Endogeneity Effectsmentioning

confidence: 99%

“…Indeed, perceived financial knowledge has been shown to have a stronger impact on a large number of financial decisions than actual financial literacy (Allgood et al, 2016;Anderson et al, 2016). Kramer (2016) furthermore finds that individuals with higher confidence are less likely to seek formal advice and Van Rooij, Lusardi, and Alessie (2012) show that overconfidence is not significantly associated with wealth, whereas underconfidence has a negative effect on wealth.…”

Section: Introductionmentioning

confidence: 99%

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Skilled But Unaware of It: Occurrence and Potential Long-Term Effects of Females' Financial Underconfidence

Bannier

Schwarz

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThis study examines actual and perceived financial sophistication (i.e., financial literacy and confidence) and its relation with individuals' current financial market participation and future-oriented financial planning. Using survey data from the German SAVE initiative, we find strong gender-and education-related differences in the distribution of the two variables:Whereas financial literacy rises in formal education, confidence increases in education for men but decreases for women. As a consequence, highly-educated women become strongly underconfident, while men remain overconfident. We show that these differences influence financial engagement:The financial decisions of highly-educated men benefit strongly from their excess confidence.Highly-educated women, in contrast, gain from their strong actual financial literacy with regard to current financial market participation, but their underconfidence impairs their long-term financial planning.JEL Classification: D91, G11, D83, J26

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Section: Introductionmentioning

confidence: 72%

Section: Endogeneity Effectsmentioning

confidence: 99%

Section: Endogeneity Effectsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Skilled But Unaware of It: Occurrence and Potential Long-Term Effects of Females' Financial Underconfidence

Bannier

Schwarz

2017

SSRN Journal

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“…While, unfortunately, we lack a definite measure of investors' financial literacy or skill, the univariate differences in Table II lend support to the idea that involved and more passive advisory clients most prominently differ in financial confidence, which has been found to be an important determinant of financial advice usage (Kramer, 2014). 19…”

Section: Client Involvementmentioning

confidence: 78%

Client Involvement in Expert Advice: Antibiotics in Finance?

et al. 2018

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We use minutes from 17,000 financial advisory sessions and corresponding client portfolio data to study how client involvement affects advisor recommendations and portfolio outcomes. We find that advisors confronted with acquiescent clients stick to standards and recommend expensive but well diversified mutual fund portfolios. However, if advisors meet with clients who voice own ideas they deviate markedly from their standards, resulting in poorer portfolio diversification and lower Sharpe ratios. Our findings that advisors cater to client requests parallel the phenomenon of doctors prescribing antibiotics to insistent patients even if inappropriate, and imply that pandering diminishes the quality of advice.JEL-Classification Codes: D14, G11, G21

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A methodological overview to defining and measuring “digital” financial literacy

Lyons

Kass-Hanna

2021

Fin Plan Rev

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Researchers and financial practitioners alike recognize the importance of defining and measuring financial literacy (FL) to better understand its relationship to financial behavior and decision-making. Despite many efforts, there is still no widely accepted definition or methodological approach for measuring FL. The rapid expansion of digital financial services (DFS), which promises to enhance financial inclusion and improve personal financial management, has brought to light a new challenge: linking FL to digital literacy (DL) and assessing their dual effect on financial outcomes. Recent research has even proposed a framework to operationalize the emerging concept of digital financial literacy (DFL), as traditional FL definitions and metrics have become insufficient to capture the specificities of financial services within a digital context. This survey article discusses empirical research techniques being used to assess FL, DL, and most recently DFL. It highlights the characteristics and limitations of these approaches and suggests ways to address some of the challenges related to the construction, testing, weighting, and standardization of multidimensional measures, as well as methodological issues related to modeling and estimation. The article is a helpful guide to researchers and practitioners interested in FL in general and in the emerging concept of "digital" financial literacy.

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Financial literacy, confidence and financial advice seeking

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Cited by 171 publications

References 57 publications

Skilled But Unaware of It: Occurrence and Potential Long-Term Effects of Females' Financial Underconfidence

Skilled But Unaware of It: Occurrence and Potential Long-Term Effects of Females' Financial Underconfidence

Client Involvement in Expert Advice: Antibiotics in Finance?

A methodological overview to defining and measuring “digital” financial literacy

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