The Connection between Financial Literacy and Numeracy: A Case Study from India

Abstract

Making financial decisions involves mathematical calculations, both simple and complex. It is a welldocumented fact that financial literacy levels among young people all over the world are quite low and that these low levels contribute to various undesirable outcomes with respect to personal financial well-being and the economy as a whole. This study explores the relationship between financial literacy and numeracy by measuring and modeling the relationship between financial literacy and numeracy levels among high school students (N = 586) in India. The results show a strong relationship between numeracy and financial literacy skills. Low numeracy is associated with a 4.8% reduction in financial literacy, while a high level of numeracy is associated with a 5.6% increase. This relationship is robust and held even when controlling for factors including gender, grade, education stream, level of financial education, language of instruction, parental involvement, parental education, family income, and future education plans. Because there is a strong relationship between numeracy and financial literacy, educational policy should consider increasing numeracy skills as one of the means of improving financial literacy. In particular numeracy as it relates to financial literacy (e.g., interest calculations, chart/data comparisons, and interpretations) should be promoted as part of the curriculum.

Financial Capability of Accounting Students in South African Universities

“…On the other hand, (n=96; 6.1%) of the respondents are less numerically skilled. While this finding is consistent with some literature (Gao, 2017;Jayaraman et al, 2018), several studies have asserted that college students and young Widmark, 2011;Fornero and Monticone, 2011;Lusardi and Wallace, 2013;French and McKillop, 2016). The results in this study contradict the majority of the literature reviewed and thus offer a different perspective on numeracy skills.…”

Understanding our world in a time of crisis: Mathematics education pedagogy toward financial numeracy

“…The analytical framework model of financial numeracy that we shared here is also interesting for researchers. In addition to providing a theoretical lens through which they can analyze the teaching of mathematics in financial contexts, this framework helps us highlight the importance of numeracy for financial decisions, an idea commonly mentioned by financial education scholars (Skagerlund et al, 2018;Jayaraman, Jambunathan, & Counselman, 2018) which has not yet been properly theorized.…”

Numeracy as a Part of Financial Literacy: Student Case Study in Slovakia

“…Thus, hand to hand goes the ability to use mathematical tools to solve numerical tasks in financial decision making (numerical literacy) with financial literacy [9]. Making financial decisions involves mathematical calculations, both simple and complex [23]. The correlation between financial literacy and mathematics across the 13 OECD countries and economies, was on average 0.83 [24].…”