Financial Literacy Overconfidence and Financial Advice Seeking
Porto, N., & Xiao, J. J. (2016). Financial Literacy Overconfidence and Financial Advice Seeking. Journal of Financial Service Professionals, 70(4).
11 Pages Posted: 29 Mar 2022
Date Written: June 1, 2016
Abstract
This study examines potential effects of overconfidence on financial advice usage. Financial literacy overconfidence is defined as the gap between consumers’ subjective and objective financial knowledge. Using a representative national survey, the result shows that over 11 percent of respondents display financial literacy overconfidence: They score higher than the average on perceived financial knowledge but are unable to answer three or more financial literacy questions
correctly. These overconfident consumers are less likely to seek professional financial advice in saving/investment and mortgage but more likely to exhibit demand for advice related to debt counseling and tax planning.
Keywords: financial literacy, financial advice, overconfidence
JEL Classification: D14
Suggested Citation: Suggested Citation