Towards more sustainable debt attitudes and behaviors: the importance of basic economic skills

Michael Goedde-Menke (), Carsten Erner and Michael Oberste
Additional contact information
Michael Goedde-Menke: University of California, Los Angeles
Carsten Erner: University of California, Los Angeles
Michael Oberste: University of Münster

Journal of Business Economics, 2017, vol. 87, issue 5, No 4, 645-668

Abstract: Abstract This research builds on the idea that debt-related financial distress faced by an individual results primarily from the inability to understand and apply fundamental economic concepts to debt decisions rather than from a lack of highly specific financial knowledge. This notion offers a potential explanation for why current financial literacy programs, which generally focus on the latter aspect, are considered to be mostly ineffective. We hypothesize that the understanding of fundamental economic concepts plays an essential role in explaining debt attitudes and behaviors. To test this hypothesis, we empirically examine how basic economic skills relate to these traits among German adolescents while controlling for their levels of financial literacy. Our results indicate that basic economic skills beneficially relate to both individual debt attitudes and behaviors. In contrast, we do not find a significant impact of financial literacy. Therefore, a stronger consideration of fundamental economic concepts in financial literacy programs might be a fruitful way to increase their effectiveness.

Keywords: Financial literacy; Economic literacy; Economic education; Debt attitude; Debt behavior (search for similar items in EconPapers)
JEL-codes: D12 D14 D18 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1007/s11573-017-0854-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jbecon:v:87:y:2017:i:5:d:10.1007_s11573-017-0854-8

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/11573

DOI: 10.1007/s11573-017-0854-8

Access Statistics for this article

Journal of Business Economics is currently edited by Günter Fandel

More articles in Journal of Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().