Overconfidence in Financial Literacy: Implications for Planners
, , oraz | 19 mar 2024
O artykule
Data publikacji: 19 mar 2024
Zakres stron: 31 - 46
Otrzymano: 31 maj 2017
Przyjęty: 30 lip 2017
DOI: https://doi.org/10.2478/fprj-2017-0007
© 2017 Laura de Zwaan et al., published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 International License.
Figure 1.
Figure 2.
Figure 3.
Definitions of variables in study
| Variable | Definition |
|---|---|
| female | dummy variable for gender: 0 indicating |
| indigenous | dummy variable for self-identification of being indigenous Australian: 0 indicating |
| above20 | dummy variable for being 20 years old or above: 0 indicating |
| non_English | dummy variable for speaking a language other than English at home: 0 indicating |
| paid_work | dummy variable for doing paid work: 0 indicating |
| study_biz | dummy variable for studying business at university: 0 indicating |
| self_rate_avg | the average self-rating on the level of understanding of eight aspects of financial literacy (i.e., |
| test_overall | the total number of correct answers to a panel of 14 quizzes on various aspects of financial literacy |
| rescaled_test_overall | Rescaled test_overall to a range between 1 and 5: rescaled_test_overall = 4 x test_overall / 14 + 1 |
| overconfidence | overconfidence in financial literacy: overconfidence = self_rate_avg - rescaled_test_overall |
Operationalisation of financial literacy constructs
| Constructs | Questions | Source |
|---|---|---|
| Budgeting, saving, managing debt | 1. Compound interest | |
| 2. Inflation | ||
| 3. Budgeting | ||
| 4. Borrowing | ||
| 5. Credit card debt | ||
| Investing | 6. Risky assets | |
| 7. Long period returns | ||
| Superannuation, retirement planning, and insurance knowledge | 8. Performance indicator | |
| 9. Concessional tax rate | ||
| 10. Life insurance need | ||
| 11. Car insurance | ||
| Taxation knowledge | 12. Assessable income | |
| 13. Tax payable | ||
| 14. Negative gearing |
Numerical summary of self-rated and tested levels of financial literacy in sample
| Variable | N | M | Mdn | SD | Skew | Kurt | Min | Max | Q1 | Q3 |
|---|---|---|---|---|---|---|---|---|---|---|
| self_rate_avg | 363 | 2.68 | 2.50 | .79 | .62 | .19 | 1.00 | 5.00 | 2.13 | 3.13 |
| test_overall | 316 | 6.70 | 7.00 | 2.75 | .02 | -.49 | .00 | 13.00 | 5.00 | 9.00 |
| Overconfidence | 316 | -.23 | -.25 | .80 | .35 | .15 | -2.32 | 2.09 | -.79 | .23 |
Regression coefficient estimates
| B | β | t | p | |
|---|---|---|---|---|
| Constant | -.504 | - | -4.090 | <.001 |
| female | .139 | .071 | 1.230 | .220 |
| Indigenous | -.063 | -.013 | -.222 | .824 |
| above20 | -.073 | -.045 | -.792 | .429 |
| non-English | .466 | .184 | 3.193 | .002 |
| paid_work | .187 | .111 | 1.897 | .059 |
| study_biz | .080 | .035 | .612 | .541 |
Seemingly unrelated regressions of self-rated and tested levels of financial literacy
| Unconstrained model | Constrained model | |||||||
|---|---|---|---|---|---|---|---|---|
| self_rate_avg | rescaled_test_overall | self_rate_avg | rescaled_test_overall | |||||
| female | -.454 | <.001 | -.594 | <.001 | -.526 | <.001 | -.526 | <.001 |
| indigenous | .347 | .193 | .409 | .117 | .379 | .090 | .379 | .090 |
| above20 | .195 | .024 | .268 | .002 | .233 | .001 | .233 | .001 |
| non_English | .299 | .030 | -.168 | .214 | .268 | .052 | -.139 | .304 |
| study_biz | .057 | .644 | -.023 | .849 | .016 | .880 | .016 | .880 |
| paid_work | .241 | .009 | .055 | .550 | .145 | .064 | .145 | .064 |
| constant | 2.748 | <.001 | 3.251 | <.001 | 2.86 | <.001 | 3.14 | <.001 |
| 35.37(6) | <.001 | 46.28(6) | <.001 | 55.22(6) | <.001 | 50.67(6) | <.001 | |
| R-squared | .105 | .133 | .099 | .128 | ||||
| residuals |
.441, <.001 | .432, <.001 | ||||||
| joint constraints test: |
n.a. | 7.09(5),.214 | ||||||
Demographics of respondents
| Demographics | Frequency | Per cent % (n=302) |
|---|---|---|
| Female | 238 | 79 |
| Indigenous | 8 | 3 |
| 20 yrs and above | 133 | 44 |
| Non-English at home | 33 | 11 |
| Paid work | 203 | 67 |
| Studying business | 42 | 14 |
| Living at home | 170 | 56 |