Financial Literacy and Gambling Behavior: Evidence from Japan

Abstract

According to a survey by Japan's Ministry of Health, Labor, and Welfare in 2017, 3.6% of Japanese adults-equivalent to about 3.2 million people-have suffered from problem gambling at some point in their lifetime. This study examines the relationship between financial literacy, financial education, and gambling behavior (measured as gambling frequency) among the Japanese population. We hypothesize that financially literate and financially educated people who use their knowledge to make sound financial decisions are less likely to gamble. The data used in this study are from a nationwide survey in Japan from the Preference Parameters Study of Osaka University in 2010 (n = 3687). To control for endogeneity bias between financial literacy and gambling behavior, we use the education of respondents' fathers as an instrumental variable. The results from the probit-instrumental variable model show that financial literacy has a significantly negative relationship with gambling frequency, while financial education has no significant relationship with gambling frequency. Our findings suggest that problem gambling may be mitigated by promoting financial literacy, but no such conclusion can be drawn for financial education.

Do Financial Literacy and Financial Education Influence Smoking Behavior in the United States?

“…We hypothesize that financial literacy and financial education, which enable people to make rational decisions, reduce the likelihood of being a smoker. Watanapongvanich, Khan, Putthinun, Ono, and Kadoya’s [ 1 ] findings on financial literacy and financial education as rational decision-making instruments support our hypothesis. To the best of our knowledge, this is the first study which addresses the association between financial literacy, financial education, and smoking behavior among the American population.…”

“…A recent study found that financial literacy and financial education significantly impact the smoking behavior in Japan [ 1 ]. The study claims that financially literate and financially educated people, who have the ability to make rational decisions, are less likely to smoke because they rationally value the current pleasure and potential negative consequences of smoking.…”

“…We observe smoking from the perspective of the imperfectly rational addiction framework and the irrational choice framework and propose a solution based on rational decision-making abilities in line with Watanapongvanich, Khan, Putthinun, Ono, and Kadoya [ 1 ]. According to Grossman [ 33 , 34 ], we can perceive smoking as a disinvestment in health capital and a catalyst for productivity loss and utility loss.…”

<p>Irrational Responses to Risk Preference Questionnaires by Patients with Diabetes with or without Retinopathy and Comparison with Those without Diabetes</p>

“…The questionnaire sought to determine the participants’ personal socioeconomic status and risk preferences (Supplemental Table S2 ). The reliability and validity have been established with the general population 12 including those with obesity 13 and smoking. 14 Retinopathy was evaluated and categorized by ophthalmologists via fundoscopy after pupillary dilatation according to the Davis classification as follows: no diabetic retinopathy, simple diabetic retinopathy, preproliferative diabetic retinopathy, and proliferative diabetic retinopathy, including panretinal photocoagulation.…”

“…The questionnaire sought to determine the participants' personal socioeconomic status and risk preferences (Supplemental Table S2). The reliability and validity have been established with the general population 12 including those with obesity 13…”