Money illusion, financial literacy and numeracy: Experimental evidence

Darriet, Elisa; Guille, Marianne; Vergnaud, J.M.; Shimizu, Mariko

doi:10.1016/j.joep.2019.102211

Cited by 28 publications

(15 citation statements)

References 25 publications

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“…Flores and Vieira (2014) found that financial literacy has a significant impact on indebtedness. According to Flores and Vieira (2014), Darriet et al (2020), and Katona (1975) there are three reasons to explain why people spend more than they earn: (i) low-income people cannot cover essential expenses; (ii) high-income people with a strong desire to spend; and (iii) lack of desire to save income. Katona (1975) discussed the origin of the credit problem, and Azma et al (2019) highlighted psychological and behavioral factors.…”

Section: Theoretical Basismentioning

confidence: 99%

Determinants of Indebtedness: Influence of Behavioral and Demographic Factors

Rahman

Azma

Masud

et al. 2020

IJFS

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This study aims to examine the influence of behavioral and demographic factors on indebtedness by constructing a model using specific determinants. The exploratory method is used through the partial least square (SmartPLS) technique, by surveying 320 respondents in Kuala Lumpur, Malaysia. A self-administered questionnaire was administered to respondents, addressing both demographic and behavioral factors. The results confirmed four of the eight hypotheses stated. Among the determinants, risk perception had a highly significant relationship with both materialism and emotion, while indebtedness had a relationship with emotion and materialism. The findings also indicated that significant differences exist between indebtedness and behavioral factors on the basis of gender, marital status, age, income, and dependence on credit cards and loans. The results may assist various economic players to design better models for credit offerings and address the credit problem in the long term.

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Section: Theoretical Basismentioning

confidence: 99%

Determinants of Indebtedness: Influence of Behavioral and Demographic Factors

Rahman

Azma

Masud

et al. 2020

IJFS

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“…These are not skills that should need to be learned in adulthood. The problem does not seem to be a lack of ability to make the calculations themselves, because better numeracy as such does not enhance financial literacy or protect people from falling into debt (Darriet et al, 2020;Dick & Jaroszek, 2013;French & McKillop, 2016). We have already seen that trying to enhance general financial literacy is unlikely to be effective.…”

Section: Cognitive Factorsmentioning

confidence: 99%

Debt and Overindebtedness: Psychological Evidence and its Policy Implications

Lea

2020

Social Issues Policy Review

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This paper reviews psychological studies of real-life use of credit, debt, and overindebtedness, with the aim of making policy recommendations that could reduce the damage done by debt to both individuals and society. The overall level of debt in society is heavily influenced by the level of economic inequality and social insecurity, and no psychological factor can prevent debt if excessive socioeconomic disadvantage is not addressed. Within that constraint, psychological precursors to debt problems, psychological impacts of debt, and psychological strategies to help people get out of debt can be identified. Research results in these areas are used to formulate a series of recommendations that could help mitigate debt problems.

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“…Money illusion therefore can damage consumers because they do not perceive it (Favaretto and Masciandaro, 2015) and make their choices using the wrong budget constraint (Vincze, 2019). Overall, money illusion has "significant consequences on financial choices and portfolio composition" (Darriet et al, 2020) especially during deflation. However, as far as CRT is concerned, literature cannot find any link between money illusion and cognitive skills (Frederick, 2005).…”

Section: Crt and Cognitive Biasesmentioning

confidence: 99%

The Impact of Cognitive Skills on Investment Decisions: An Empirical Assessment and Policy Suggestions

Esposito

Lorenzo

2021

SSRN Journal

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Money illusion, financial literacy and numeracy: Experimental evidence

Cited by 28 publications

References 25 publications

Determinants of Indebtedness: Influence of Behavioral and Demographic Factors

Determinants of Indebtedness: Influence of Behavioral and Demographic Factors

Debt and Overindebtedness: Psychological Evidence and its Policy Implications

The Impact of Cognitive Skills on Investment Decisions: An Empirical Assessment and Policy Suggestions

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