IDEAS home Printed from https://ideas.repec.org/a/eee/joepsy/v67y2018icp66-86.html
   My bibliography  Save this article

Gender- and education-related effects of financial literacy and confidence on financial wealth

Author

Listed:
  • Bannier, Christina E.
  • Schwarz, Milena

Abstract

This study examines the influence of actual and perceived financial knowledge (i.e., financial literacy and confidence) on financial wealth. We show that consideration of gender and education as moderators helps to uncover intricate effects. Greater financial literacy leads to higher wealth, with higher education strengthening this effect considerably for women, but not so for men. Men’s wealth also rises in confidence, while there is hardly any confidence effect for women. Our results are robust against the employment of different instrumental variables and confidence measures, consideration of one-time wealth effects and mode of financial decision making.

Suggested Citation

  • Bannier, Christina E. & Schwarz, Milena, 2018. "Gender- and education-related effects of financial literacy and confidence on financial wealth," Journal of Economic Psychology, Elsevier, vol. 67(C), pages 66-86.
    • Handle: RePEc:eee:joepsy:v:67:y:2018:i:c:p:66-86
    DOI: 10.1016/j.joep.2018.05.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S016748701730716X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.joep.2018.05.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Souvik Banerjee & Pinka Chatterji & Kajal Lahiri, 2017. "Effects of Psychiatric Disorders on Labor Market Outcomes: A Latent Variable Approach Using Multiple Clinical Indicators," Health Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 184-205, February.
    2. Daniel Fernandes & John G. Lynch & Richard G. Netemeyer, 2014. "Financial Literacy, Financial Education, and Downstream Financial Behaviors," Management Science, INFORMS, vol. 60(8), pages 1861-1883, August.
    3. Alan L. Gustman & Thomas L. Steinmeier & Nahid Tabatabai, 2012. "Financial Knowledge and Financial Literacy at the Household Level," American Economic Review, American Economic Association, vol. 102(3), pages 309-313, May.
    4. van Rooij, Maarten & Lusardi, Annamaria & Alessie, Rob, 2011. "Financial literacy and stock market participation," Journal of Financial Economics, Elsevier, vol. 101(2), pages 449-472, August.
    5. Sanderson, Eleanor & Windmeijer, Frank, 2016. "A weak instrument F-test in linear IV models with multiple endogenous variables," Journal of Econometrics, Elsevier, vol. 190(2), pages 212-221.
    6. Annamaria Lusardi & Olivia S. Mitchell, 2008. "Planning and Financial Literacy: How Do Women Fare?," American Economic Review, American Economic Association, vol. 98(2), pages 413-417, May.
    7. Tim Kaiser & Lukas Menkhoff, 2017. "Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?," The World Bank Economic Review, World Bank, vol. 31(3), pages 611-630.
    8. Jere R. Behrman & Olivia S. Mitchell & Cindy K. Soo & David Bravo, 2012. "How Financial Literacy Affects Household Wealth Accumulation," American Economic Review, American Economic Association, vol. 102(3), pages 300-304, May.
    9. Michael Ziegelmeyer, 2013. "Illuminate the unknown: evaluation of imputation procedures based on the SAVE survey," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 97(1), pages 49-76, January.
    10. Lusardi, Annamaria & Tufano, Peter, 2015. "Debt literacy, financial experiences, and overindebtedness," Journal of Pension Economics and Finance, Cambridge University Press, vol. 14(4), pages 332-368, October.
    11. Denny, Kevin & Oppedisano, Veruska, 2013. "The surprising effect of larger class sizes: Evidence using two identification strategies," Labour Economics, Elsevier, vol. 23(C), pages 57-65.
    12. Lusardi, Annamaria & Mitchell, Olivia S., 2007. "Baby Boomer retirement security: The roles of planning, financial literacy, and housing wealth," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 205-224, January.
    13. Maarten C.J. van Rooij & Annamaria Lusardi & Rob J.M. Alessie, 2012. "Financial Literacy, Retirement Planning and Household Wealth," Economic Journal, Royal Economic Society, vol. 122(560), pages 449-478, May.
    14. repec:ces:ifodic:v:13:y:2015:i:2:p:19166305 is not listed on IDEAS
    15. Hans-Martin Von Gaudecker, 2015. "How Does Household Portfolio Diversification Vary with Financial Literacy and Financial Advice?," Journal of Finance, American Finance Association, vol. 70(2), pages 489-507, April.
    16. Muriel Niederle & Lise Vesterlund, 2007. "Do Women Shy Away From Competition? Do Men Compete Too Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(3), pages 1067-1101.
    17. Mitchell, Olivia S. & Utkus, Stephen P. (ed.), 2004. "Pension Design and Structure: New Lessons from Behavioral Finance," OUP Catalogue, Oxford University Press, number 9780199273393, Decembrie.
    18. Marc M. Kramer, 2012. "Financial Advice and Individual Investor Portfolio Performance," Financial Management, Financial Management Association International, vol. 41(2), pages 395-428, June.
    19. Joël Peress, 2004. "Wealth, Information Acquisition, and Portfolio Choice," Review of Financial Studies, Society for Financial Studies, vol. 17(3), pages 879-914.
    20. Farrell, Lisa & Fry, Tim R.L. & Risse, Leonora, 2016. "The significance of financial self-efficacy in explaining women’s personal finance behaviour," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 85-99.
    21. Klapper, Leora & Panos, Georgios A., 2011. "Financial literacy and retirement planning: the Russian case," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 599-618, October.
    22. Annamaria Lusardi & Olivia S. Mitchell, 2017. "How Ordinary Consumers Make Complex Economic Decisions: Financial Literacy and Retirement Readiness," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 1-31, September.
    23. Adeline Delavande & Susann Rohwedder & Robert Willis, 2008. "Preparation for Retirement, Financial Literacy and Cognitive Resources," Working Papers wp190, University of Michigan, Michigan Retirement Research Center.
    24. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    25. Fisher, Patti J. & Yao, Rui, 2017. "Gender differences in financial risk tolerance," Journal of Economic Psychology, Elsevier, vol. 61(C), pages 191-202.
    26. repec:ecj:econjl:v:122:y:2012:i::p:449-478 is not listed on IDEAS
    27. Annamaria Lusardi & Olivia S. Mitchell, 2005. "Financial Literacy and Planning: Implications for Retirement Wellbeing," CeRP Working Papers 46, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    28. Daniel Schunk, 2008. "A Markov chain Monte Carlo algorithm for multiple imputation in large surveys," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 92(1), pages 101-114, February.
    29. Utpal Bhattacharya & Andreas Hackethal & Simon Kaesler & Benjamin Loos & Steffen Meyer, 2012. "Is Unbiased Financial Advice to Retail Investors Sufficient? Answers from a Large Field Study," Review of Financial Studies, Society for Financial Studies, vol. 25(4), pages 975-1032.
    30. Driva, Anastasia & Lührmann, Melanie & Winter, Joachim, 2016. "Gender differences and stereotypes in financial literacy: Off to an early start," Economics Letters, Elsevier, vol. 146(C), pages 143-146.
    31. Hackethal, Andreas & Haliassos, Michael & Jappelli, Tullio, 2012. "Financial advisors: A case of babysitters?," Journal of Banking & Finance, Elsevier, vol. 36(2), pages 509-524.
    32. James P. Smith & John J. McArdle & Robert Willis, 2010. "Financial Decision Making and Cognition in a Family Context," Economic Journal, Royal Economic Society, vol. 120(548), pages 363-380, November.
    33. Bannier, Christina E. & Neubert, Milena, 2016. "Gender differences in financial risk taking: The role of financial literacy and risk tolerance," Economics Letters, Elsevier, vol. 145(C), pages 130-135.
    34. Sendhil Mullainathan & Markus Noeth & Antoinette Schoar, 2012. "The Market for Financial Advice: An Audit Study," NBER Working Papers 17929, National Bureau of Economic Research, Inc.
    35. Cragg, John G. & Donald, Stephen G., 1993. "Testing Identifiability and Specification in Instrumental Variable Models," Econometric Theory, Cambridge University Press, vol. 9(2), pages 222-240, April.
    36. Grohmann, Antonia & Hübler, Olaf & Kouwenberg, Roy & Menkhoff, Lukas, 2021. "Financial literacy: Thai middle-class women do not lag behind," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    37. Natascha Haitz, 2015. "Old-age Poverty in OECD Countries and the Issue of Gender Pension Gaps," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(2), pages 73-75, 08.
    38. James P. Smith & John J. McArdle & Robert Willis, 2010. "Financial Decision Making and Cognition in a Family Context," Economic Journal, Royal Economic Society, vol. 120(548), pages 363-380, November.
    39. Hoffmann, Arvid O.I. & Post, Thomas, 2014. "Self-attribution bias in consumer financial decision-making: How investment returns affect individuals’ belief in skill," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 52(C), pages 23-28.
    40. Susanna Sandstr m & Timothy Smeeding, 2005. "Poverty and Income Maintenance in Old Age: A Cross-National View of Low Income Older Women," LIS Working papers 398, LIS Cross-National Data Center in Luxembourg.
    41. Mishra, Vinod & Smyth, Russell, 2015. "Estimating returns to schooling in urban China using conventional and heteroskedasticity-based instruments," Economic Modelling, Elsevier, vol. 47(C), pages 166-173.
    42. Arthur Lewbel, 2012. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80.
    43. Grohmann, Antonia & Kouwenberg, Roy & Menkhoff, Lukas, 2015. "Childhood roots of financial literacy," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 114-133.
    44. Anderson, Anders & Baker, Forest & Robinson, David T., 2017. "Precautionary savings, retirement planning and misperceptions of financial literacy," Journal of Financial Economics, Elsevier, vol. 126(2), pages 383-398.
    45. Andreas Drichoutis & Rodolfo Nayga & Panagiotis Lazaridis, 2012. "Food away from home expenditures and obesity among older Europeans: are there gender differences?," Empirical Economics, Springer, vol. 42(3), pages 1051-1078, June.
    46. Andrews,Donald W. K. & Stock,James H. (ed.), 2005. "Identification and Inference for Econometric Models," Cambridge Books, Cambridge University Press, number 9780521844413.
    47. Tang, Ning & Baker, Andrew, 2016. "Self-esteem, financial knowledge and financial behavior," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 164-176.
    48. Dick, Christian D. & Jaroszek, Lena M., 2013. "Knowing what not to do: Financial literacy and consumer credit choices," ZEW Discussion Papers 13-027, ZEW - Leibniz Centre for European Economic Research.
    49. Potrich, Ani Caroline Grigion & Vieira, Kelmara Mendes & Coronel, Daniel Arruda & Bender Filho, Reisoli, 2015. "Financial literacy in Southern Brazil: Modeling and invariance between genders," Journal of Behavioral and Experimental Finance, Elsevier, vol. 6(C), pages 1-12.
    50. Sam Allgood & William B. Walstad, 2016. "The Effects Of Perceived And Actual Financial Literacy On Financial Behaviors," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 675-697, January.
    51. Gathergood, John, 2012. "Self-control, financial literacy and consumer over-indebtedness," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 590-602.
    52. Tabea Bucher-Koenen & Annamaria Lusardi & Rob Alessie & Maarten van Rooij, 2017. "How Financially Literate Are Women? An Overview and New Insights," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(2), pages 255-283, July.
    53. Almenberg, Johan & Dreber, Anna, 2015. "Gender, stock market participation and financial literacy," Economics Letters, Elsevier, vol. 137(C), pages 140-142.
    54. Justine S. Hastings & Brigitte C. Madrian & William L. Skimmyhorn, 2013. "Financial Literacy, Financial Education, and Economic Outcomes," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 347-373, May.
    55. Susanne Rässler & Regina Riphahn, 2006. "Survey item nonresponse and its treatment," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 90(1), pages 217-232, March.
    56. Kramer, Marc M., 2016. "Financial literacy, confidence and financial advice seeking," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 198-217.
    57. Leora Klapper & Georgios A. Panos, 2011. "Financial Literacy and Retirement Planning in View of a Growing Youth Demographic: The Russian Case," CeRP Working Papers 114, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    58. Adnan Balloch & Anamaria Nicolae & Dennis Philip, 2015. "Stock Market Literacy, Trust, and Participation," Review of Finance, European Finance Association, vol. 19(5), pages 1925-1963.
    59. Raquel Fonseca & Kathleen J. Mullen & Gema Zamarro & Julie Zissimopoulos, 2012. "What Explains the Gender Gap in Financial Literacy? The Role of Household Decision Making," Journal of Consumer Affairs, Wiley Blackwell, vol. 46(1), pages 90-106, March.
    60. Frederic S. Mishkin, 2008. "The importance of economic education and financial literacy: a speech at the Third National Summit on Economic and Financial Literacy, Washington, D.C., February 27, 2008," Speech 368, Board of Governors of the Federal Reserve System (U.S.).
    61. Vinod Mishra & Ingrid Nielsen & Russell Smyth & Alex Newman, 2014. "The Job Satisfaction-Life Satisfaction Relationship Revisited: Using the Lewbel Estimation Technique to Estimate Causal Effects Using Cross-Sectional Data," Monash Economics Working Papers 26-14, Monash University, Department of Economics.
    62. Natascha Haitz, 2015. "Old-age Poverty in OECD Countries and the Issue of Gender Pension Gaps," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(02), pages 73-75, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bannier, Christina E. & Schwarz, Milena, 2017. "Skilled but unaware of it: Occurrence and potential long-term effects of females' financial underconfidence," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168188, Verein für Socialpolitik / German Economic Association.
    2. Oscar A. Stolper & Andreas Walter, 2017. "Financial literacy, financial advice, and financial behavior," Journal of Business Economics, Springer, vol. 87(5), pages 581-643, July.
    3. Neubert, Milena & Bannier, Christina E., 2016. "Actual and perceived financial sophistication and wealth accumulation: The role of education and gender," VfS Annual Conference 2016 (Augsburg): Demographic Change 145593, Verein für Socialpolitik / German Economic Association.
    4. Grohmann, Antonia & Hübler, Olaf & Kouwenberg, Roy & Menkhoff, Lukas, 2021. "Financial literacy: Thai middle-class women do not lag behind," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    5. Azra Zaimovic & Anes Torlakovic & Almira Arnaut-Berilo & Tarik Zaimovic & Lejla Dedovic & Minela Nuhic Meskovic, 2023. "Mapping Financial Literacy: A Systematic Literature Review of Determinants and Recent Trends," Sustainability, MDPI, vol. 15(12), pages 1-30, June.
    6. Gerrans, Paul, 2021. "Undergraduate student financial education interventions: Medium term evidence of retention, decay, and confidence in financial literacy," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    7. Grohmann, Antonia, 2018. "Financial literacy and financial behavior: Evidence from the emerging Asian middle class," Pacific-Basin Finance Journal, Elsevier, vol. 48(C), pages 129-143.
    8. Li, Xiao, 2020. "When financial literacy meets textual analysis: A conceptual review," Journal of Behavioral and Experimental Finance, Elsevier, vol. 28(C).
    9. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    10. Sholevar, Maryam & Harris, Laurence, 2019. "Mind the gap: A discussion paper on Financial Literacy, Financial behaviour and Financial Education : Is there any Gender Gap?," OSF Preprints b7zd6, Center for Open Science.
    11. Tabea Bucher-Koenen & Annamaria Lusardi & Rob Alessie & Maarten van Rooij, 2017. "How Financially Literate Are Women? An Overview and New Insights," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(2), pages 255-283, July.
    12. Marie-Hélène BROIHANNE, 2021. "Testing the gender gap in subjective financial literacy of spouses," Working Papers of LaRGE Research Center 2021-08, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    13. Christina E. Bannier & Dennis Sinzig, 2018. "Finanzwissen und Vorsorgesparverhalten [Financial literacy and savings behavior]," Schmalenbach Journal of Business Research, Springer, vol. 70(3), pages 243-275, August.
    14. David Aristei & Manuela Gallo, 2021. "Financial Knowledge, Confidence, and Sustainable Financial Behavior," Sustainability, MDPI, vol. 13(19), pages 1-21, September.
    15. Antonia Grohmann & Annekathrin Schoofs, 2018. "Financial Literacy and Intra-Household Decision Making: Evidence from Rwanda," Discussion Papers of DIW Berlin 1720, DIW Berlin, German Institute for Economic Research.
    16. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    17. Nolan, Anne & Doorley, Karina, 2019. "Financial Literacy and Preparation for Retirement," IZA Discussion Papers 12187, Institute of Labor Economics (IZA).
    18. Zhou, Yang & Yang, Manfang & Gan, Xu, 2023. "Education and financial literacy: Evidence from compulsory schooling law in China," The Quarterly Review of Economics and Finance, Elsevier, vol. 89(C), pages 335-346.
    19. Cordero, José Manuel & Gil, María & Pedraja Chaparro, Francisco, 2016. "Exploring the effect of financial literacy courses on student achievement: a cross-country approach using PISA 2012 data," MPRA Paper 75474, University Library of Munich, Germany.
    20. repec:mea:meawpa:14282 is not listed on IDEAS
    21. Elisabeth Beckmann & Sarah Reiter, 2020. "How financially literate is CESEE? Insights from the OeNB Euro Survey," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q3/20, pages 36-59.

    More about this item

    Keywords

    Household finance; Financial literacy; Confidence; Wealth; Gender; Education;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:67:y:2018:i:c:p:66-86. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/joep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.