Abstract
This article explores how financial literacy, comprised of both actual financial knowledge and perceived financial confidence, affect financial decisions. Using national survey data from the United States, results indicate that financial confidence is a critical component of financial literacy and is important across all knowledge levels. However, overconfident individuals, or those with high confidence (or self-assessed) knowledge but low actual knowledge, have a higher propensity to engage in risky (costly) financial behaviors. Together, results suggest that financial literacy initiatives should focus not only on factual knowledge, but on helping individuals achieve a healthy dose of confidence.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.