On a Need-to-Know Basis: Divergent Trajectories of Financial Expertise in Couples and Effects on Independent Search and Decision Making

109 Pages Posted: 12 Jun 2015  

Adrian F. Ward

The University of Texas at Austin

John G. Lynch Jr.

University of Colorado-Boulder, Leeds School of Business - Center for Research on Consumer Financial Decision Making

Date Written: June 9, 2015

Abstract

Many consumers suffer from low levels of financial literacy, and attempts to increase this dimension of consumer expertise via educational interventions are typically unsuccessful. We propose that many of these apparent deficits in literacy and learning may be caused by a cognitively efficient distribution of responsibility for knowledge and decision-making in different domains between relationship partners. New relationship partners adopt specialized domains of responsibility quickly and intuitively in a process guided more by circumstantial factors than by matching tasks with aptitudes (study 1). Cross-sectional data from consumers in long-term relationships provide evidence that distributions of responsibility for financial decision-making between partners may give rise to differences in financial literacy, such that the financial specialist develops expertise in this area while the non-specialist does not (study 3). This ever-growing gap in financial literacy is generally unrecognized by consumers (studies 2, 4), despite being linked to corresponding differences in both financial decision-making (studies 5, 6) and financial information search (study 6). Consumers seem to develop expertise on a “need to know” basis. We argue that offloading responsibility to a relationship partner may eliminate this need in the present, while simultaneously creating barriers to developing expertise if and when it is needed in the future.

Keywords: Financial Literacy, Financial Decision-Making, Information Search, Learning, Attention, Expertise, Education, Couples, Relationships, Transactive Memory, Cognitive Interdependence

Suggested Citation

Ward, Adrian F. and Lynch, John G., On a Need-to-Know Basis: Divergent Trajectories of Financial Expertise in Couples and Effects on Independent Search and Decision Making (June 9, 2015). Available at SSRN: https://ssrn.com/abstract=2616867 or http://dx.doi.org/10.2139/ssrn.2616867

Adrian F. Ward (Contact Author)

The University of Texas at Austin ( email )

Austin, TX
United States

HOME PAGE: http://www.adrianfward.com

John G. Lynch Jr.

University of Colorado-Boulder, Leeds School of Business - Center for Research on Consumer Financial Decision Making ( email )

Leeds School of Business
Boulder, CO 80309-0419
United States
919-971-5201 (Phone)

HOME PAGE: http://www.colorado.edu/business/john-g-lynch-jr

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