Abstract
We examine financial literacy and debt literacy among the people living under the poverty line through a survey. The respondents are also asked to judge the extent of their own overall financial knowledge and debt position. Financial literacy and debt literacy are measured by questions testing knowledge of fundamental concepts and by self-assessed financial knowledge. We evaluate a number of relationships: the relationship between basic financial literacy and debt literacy; the relationship between perceived knowledge and actual knowledge; finally the relationship between financial knowledge and perception on debt. Overall, we find that both basic financial literacy and debt literacy are very low. Also, we find that on average those that display basic financial knowledge do not perform better on the debt literacy questions than the rest. We confirm the previous finding that people think that they know more than they actually do. Finally, we find that over two-third of this population may in fact be discouraged from participating in the credit market.
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