Theoretical underpinnings of consumers’ financial capability research

Lučić, Andrea; Babrić, Dajana; Uzelac, Marija

doi:10.1111/ijcs.12778

Cited by 14 publications

(15 citation statements)

References 210 publications

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“…We suggest that researchers should look into ways to adequately measure consumer disconnection. Furthermore, to ameliorate the DFP framework and in line with the work of Lučić et al (2022), who examined personal financial capabilities, we feel several subjects could be investigated. DFP profiles may vary significantly depending on socio‐economic class, gender and financial context.…”

Section: Discussionmentioning

confidence: 83%

“…A perfect example is provided by Bianco (2008), who explains how eager US mortgage seekers falsified their documents related to their financial situation. Personal behavioural finance draws from various disciplines, including sociology, psychology and economics (Luči c et al, 2022). We note that research on this subject has been and remains active (Perry & Lee, 2012).…”

Section: Research Questionmentioning

confidence: 99%

“…However, consumers often make decisions based on raw emotions (Hoffmann et al, 2012; Kardes et al, 2004). In this case, their expected financial capability, although a well‐acknowledged requirement for financial well‐being (Lučić et al, 2022), and their financial sophistication do not permeate their financial decisions (Estelami, 2014), possibly resulting in dubious decision making and increased vulnerability. To that effect, Starcke and Brand (2012) observe that people make more mistakes when in a vulnerable position.…”

Section: Literature Reviewmentioning

confidence: 99%

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Dark financial profile leading to debt traps – A theoretical framework

Mesly

Huck²

2022

Int J Consumer Studies

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This paper proposes a theoretical framework in an attempt to better explain the behaviours of some consumers of financial products during market crises. We review the established notions of irrationality and deception, and then add the construct of disconnection from financial needs, goals and preferences. We propone that these three concepts, respectively, cognitive, behavioural and emotional in nature, create a dark financial profile (DFP) by which these consumers unwittingly build debt. We use bibliometrics to highlight the current gap in the scholarly domains of interest and provide market examples of how the DFP likely deploys in the marketplace. This is the first article to use disconnection in such a context, and to improve the understanding of consumer behaviours in regard to disconnection, irrationality, deception and debt. Thus, we enrich the literature on debt, which has at times ignored the role of the combination of these constructs. We investigate avenues of research for developing further our emerging framework, especially on the notion of disconnection, and suggest that this effort may assist in preparing effective marketing of financial education programs and improving lending practices.

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Section: Discussionmentioning

confidence: 83%

Section: Research Questionmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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Dark financial profile leading to debt traps – A theoretical framework

Mesly

Huck²

2022

Int J Consumer Studies

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“…It is focused on the increase of knowledge, which is ineffective (IOSCO and OECD, 2018). Efforts to alter financial behaviour will be less effective if they focus only on knowledge transfer and if they fail to consider targeting specific elements that form the behaviour (Lu ci c et al, 2022). While the shortcomings of traditional efforts to change financial behaviour are well-known, we are unaware of studies aiming to design more effective intervention strategies.…”

Section: Introductionmentioning

confidence: 99%

Investigating alternative avenues for financial behaviour change: moving beyond the traditional approach

Lučić,

Uzelac

2024

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Purpose This study aims to explore possible behavioural change venues, beyond the traditional approach to financial education, using the capability-opportunity-motivation behaviour theoretical framework of behavioural change. Design/methodology/approach The study included 45, semi-structured, in-depth interviews of young adults to explore which elements of financial behaviour formation should interventions target to be effective. Findings To strengthen capability, the study recommends behavioural education and training for boosting financial knowledge and skills, enablement of financial independence and modelling for empowering self-control and reducing impulsiveness. To boost motivation, gamification of modelling is advised for boosting responsible financial behaviour as part of the identity and inducing consideration of future consequences. Persuasion is advised for inducing positive emotions while incentivization and coercion are advised for empowering self-conscious intentions. To rise opportunity, the study proposes incentivization and coercion imposed by parents, and governmental efforts regarding restriction, enablement and environmental restructuring. Practical implications The study brings recommendations for developing efficient interventions for strengthening responsible financial behaviour that may help design type-specific education programmes to promote responsible financial behaviour. Originality/value The present study attempts to explore new venues in intervention design that break away from the traditional approach of financial education focused on knowledge and skills that is proven to be ineffective

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“…Recent advances in behavioural science are highlighting the importance of intuitive reasoning that shapes our financial decision making (Lucic et al, 2022). Neoclassical economics traditionally assumes consumers to be rational actors, that is, careful and consistent in their decisions, reflecting clear latent preferences and strong reasoning skills (Altman, 2013).…”

Section: Introductionmentioning

confidence: 99%

Sludged! Can financial literacy shield against price manipulation at the shops?

West

Butler

Smith

2023

Int J Consumer Studies

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Retailers lure consumers with clever use of choice architecture; examples include “bargains” heavily restricted in the fine print and discounts structured to exaggerate the true saving. Given that financial literacy is a key competency for managing money, good financial literacy may provide protection from these “sludges.” In an exploratory experiment, we measure 48 university students' retail literacy and financial literacy, while concurrently tracking their emotional reactions and decision time using FaceReader software. We then test hypotheses on a larger sample using an online survey. We find that strong financial literacy supports retail literacy and vice versa, but the two constructs are distinct. The differences are identified through mathematical and methodological reasoning, gender, and emotion. While gender remains a factor for financial literacy, it is less prominent in retail literacy, and women respond more positively to retail literacy performance measurement. We recommend future investigation into building women's financial literacy performance using materials that are aesthetically pleasing and based on familiar financial frames and scenarios.

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Theoretical underpinnings of consumers’ financial capability research

Cited by 14 publications

References 210 publications

Dark financial profile leading to debt traps – A theoretical framework

Dark financial profile leading to debt traps – A theoretical framework

Investigating alternative avenues for financial behaviour change: moving beyond the traditional approach

Sludged! Can financial literacy shield against price manipulation at the shops?

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