Households' financial resilience, risk perceptions, and financial literacy: Evidence from a survey experiment

Arbeitspapier

We examine the financial resilience of Austrian households, relating it to their experience of financial shocks earlier in life and to their financial literacy. We find that previous negative (positive) financial shocks are negatively (positively) related to financial resilience. Financial literacy and households' financial resilience are positively related. Based on a randomized survey experiment, we investigate the role of over-optimism when evaluating the potential impact of future events on households' financial situation. Households are asked to assess specific risks for their own household (treatment) or for a household with similar characteristics (control). On average, households assign a lower probability to shocks that negatively affect personal finances if asked for their own household compared to a similar household. We do not find the reverse effect for positive shocks. We find a negative correlation between over-optimism and financial literacy, indicating that financial literacy is relevant to both, financial behavior and the ability to assess financial shocks.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ZEW Discussion Papers ; No. 23-074

Classification and Topics

• Classification: Wirtschaft ; Household Saving; Personal Finance ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
• Subject: financial fragility ; expectations ; risk assessment ; financial behavior ; over-optimism

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bucher-Koenen, Tabea ; Fessler, Pirmin ; Silgoner, Maria Antoinette
• Event: Veröffentlichung
• (who): ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
• (where): Mannheim
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/283612
• Last update: 10.03.2025, 11:45 AM CET