Culture and Adult Financial Literacy: Evidence from the United States

Arbeitspapier

Using a US nationally representative sample of over 6,000 adults from 26 countries of ancestry, we find a strong association between their financial literacy in the US and the financial literacy level in their self-reported country of ancestry. More specifically, if an individual from a country of ancestry with "average" financial literacy had instead come from a country with financial literacy one-standard deviation above the mean, his or her likelihood of answering correctly basic financial literacy questions regarding inflation, risk diversification, and interest rate in the US would have increased by 4 percentage points, a 9% increase relative to the average financial literacy in our sample of 43%. The cultural components behind this observed association include a strong emphasis on patience, long-term orientation and risk-aversion in the country of ancestry. We also find that the association is driven by financial literacy on risk diversification and interest compounding.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 13349

Classification and Topics

• Classification: Wirtschaft ; Household Saving; Personal Finance ; Educational Finance; Financial Aid ; Cultural Economics; Economic Sociology; Economic Anthropology: General
• Subject: financial literacy ; culture ; epidemiological approach ; economic decisions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Davoli, Maddalena ; Rodríguez-Planas, Núria
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/223791
• Last update: 10.03.2025, 11:44 AM CET