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Subjective Belief Distributions and the Characterization of Economic Literacy

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  • Di Girolamo, Amalia

    (University of Birmingham)

  • Harrison, Glenn

    (Georgia State University, CEAR)

  • Lau, Morten

    (Copenhagen Business School)

  • Swarthout, J. Todd

    (Georgia State University)

Abstract

We characterize the literacy of an individual in a domain by their elicited subjective belief distribution over the possible responses to a question posed in that domain. By eliciting the distribution, rather than just the answers to true/false or multiple choice questions, we can directly measure the confidence that an individual has about their knowledge of some fact. We consider literacy across several financial and economic domains. We find considerable demographic heterogeneity in the degree of literacy. We also measure the degree of consistency within a sample about their knowledge, even when that knowledge is imperfect.

Suggested Citation

  • Di Girolamo, Amalia & Harrison, Glenn & Lau, Morten & Swarthout, J. Todd, 2016. "Subjective Belief Distributions and the Characterization of Economic Literacy," IZA Discussion Papers 9856, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9856
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    Cited by:

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    2. Daiane De Bortoli & Newton da Costa Jr. & Marco Goulart & Jéssica Campara, 2019. "Personality traits and investor profile analysis: A behavioral finance study," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-18, March.
    3. Kubitza, Christian & Hofmann, Annette & Steinorth, Petra, 2019. "Financial literacy and precautionary insurance," ICIR Working Paper Series 34/19, Goethe University Frankfurt, International Center for Insurance Regulation (ICIR).
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    6. Glenn Harrison & Karlijn Morsink & Mark Schneider, 2022. "Literacy and the quality of index insurance decisions," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 47(1), pages 66-97, March.
    7. Muñoz-Murillo, Melisa & Álvarez-Franco, Pilar B. & Restrepo-Tobón, Diego A., 2020. "The role of cognitive abilities on financial literacy: New experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 84(C).
    8. Pham, Huong Dien & Waibel, Hermann, 2018. "Risk attitudes, knowledge, skills and agricultural productivity," TVSEP Working Papers wp-007, Leibniz Universitaet Hannover, Institute of Development and Agricultural Economics, Project TVSEP.
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    More about this item

    Keywords

    subjective beliefs; economic literacy;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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