Financial Literacy and Perceived Economic Outcomes
32 Pages Posted: 3 Jan 2019 Last revised: 23 Jul 2021
Date Written: December 30, 2020
We explore the relationship between financial literacy and self-reported economic outcomes using survey data from the United States. Our dataset includes a large number of covariates from the National Financial Capability Study (NCFS), widely used by literacy researchers, and we use a new econometric technique developed by Hahn et al. (2018), designed specifically for causal inference from observational data, to test whether changes in financial literacy infer meaningful changes in self-perceived economic outcomes. We find a negative treatment parameter on financial literacy contrary to the presumption in many empirical studies, and consistent with the recent work of Netemeyer et al. (2018). We conclude with a discussion of heterogeneity of the financial literacy treatment effect on household income, gender and education level subpopulations. In general, we do not find the effect of more financial literacy is to raise perceived economic outcomes.
Keywords: Financial Literacy, Economic Outcomes, Treatment Effect Estimation
JEL Classification: D1
Suggested Citation: Suggested Citation