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Adapting the National Financial Capability Test to Address Generational Differences in Cognitive Biases

Author

Listed:
  • Sergio Da Silva

    (Department of Economics, Socioeconomic Center, Federal University of Santa Catarina, Florianopolis 88049-970, SC, Brazil)

  • Ana Paraboni

    (Department of Business Administration, Socioeconomic Center, Federal University of Santa Catarina, Florianopolis 88049-970, SC, Brazil)

  • Raul Matsushita

    (Department of Statistics, Institute of Exact Sciences, University of Brasilia, Brasilia 70910-900, DF, Brazil)

Abstract

This study examined the influence of cognitive biases on financial literacy test outcomes across four generational groups: Gen Z, Millennials, Gen X, and Baby Boomers. Using the National Financial Capability Test and an online in silico experiment, we analyzed how cognitive biases influence the likely responses of each generation. The results indicate that the current test format aligns more closely with Baby Boomers, who are less affected by certain biases but tend to exhibit resistance to new financial strategies. A key contribution of this research is the identification of generational bias profiles and actionable recommendations for tailoring financial literacy assessments to reflect these differences. Our approach not only advances behavioral finance literature but also introduces innovative methodology through AI-driven simulations, providing a replicable framework for exploring cognitive influences in decision-making. The findings underscore the need for tailored financial education programs that consider these cognitive biases, aiming to foster unbiased financial decision-making across age groups.

Suggested Citation

  • Sergio Da Silva & Ana Paraboni & Raul Matsushita, 2024. "Adapting the National Financial Capability Test to Address Generational Differences in Cognitive Biases," IJFS, MDPI, vol. 12(4), pages 1-20, December.
    • Handle: RePEc:gam:jijfss:v:12:y:2024:i:4:p:124-:d:1541624
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    References listed on IDEAS

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    2. Soumyadwip Das & Sumit Kumar Maji, 2023. "Farmer's financial literacy and its determinants: evidence from South Asia," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 50(9), pages 1341-1354, March.
    3. Adele Atkinson & Flore-Anne Messy, 2012. "Measuring Financial Literacy: Results of the OECD / International Network on Financial Education (INFE) Pilot Study," OECD Working Papers on Finance, Insurance and Private Pensions 15, OECD Publishing.
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