Has Financial Knowledge Increased in the United States?

Journal of Financial Counseling and Planning, Forthcoming

27 Pages Posted: 28 Mar 2022

See all articles by Kyoung Tae Kim

Kyoung Tae Kim

University of Alabama

Sunwoo T. Lee

York University

Sherman D. Hanna

Ohio State University (OSU)

Date Written: February 26, 2022

Abstract

This study explores financial knowledge patterns from 2009 to 2018, focusing on objective and subjective knowledge, overconfidence in financial knowledge, and “Don’t know” responses. We used four waves of National Financial Capability Study (NFCS) datasets. Objective financial knowledge was lower in 2018 than in 2009, and the proportion of individuals who were overconfident was higher in 2018 than in 2009. The mean number of “Don’t know” responses to objective knowledge questions increased consistently over the period. Most of these patterns persisted when we controlled for household characteristics in regressions. The lack of increases in financial knowledge despite formal and informal educational efforts raises the question as to whether existing efforts for formal and informal education are sufficient.

Keywords: Financial knowledge, financial literacy, overconfidence, trends, National Financial Capability Study

JEL Classification: D14,D83,G40, G53

Suggested Citation

Kim, Kyoung Tae and Lee, Sunwoo and Hanna, Sherman D., Has Financial Knowledge Increased in the United States? (February 26, 2022). Journal of Financial Counseling and Planning, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4044809

Kyoung Tae Kim (Contact Author)

University of Alabama ( email )

316-C Adams Hall
Tuscaloosa, AL 35487-0001
United States

Sunwoo Lee

York University ( email )

4700 Keele Street
252 Atkinson Building
Toronto, Ontario M3J 1P3
Canada

Sherman D. Hanna

Ohio State University (OSU) ( email )

1787 Neil Avenue
Campbell 265D
Columbus, OH 43210
United States
614-292-4584 (Phone)

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