Subjective Knowledge Differences within Couples Predict Influence over Shared Financial Decisions

Jenny G. Olson and Scott I. Rick

Journal of the Association for Consumer Research, 2023, vol. 8, issue 4, 378 - 389

Abstract: Romantic partners rarely have equal responsibility for, and equal influence over, their shared financial matters. Intuitively, one might expect the partner with greater financial knowledge to have greater influence. However, unless partners are routinely quizzing each other, they are unlikely to have a precise understanding of each other’s objective financial knowledge (OFK). We document that partner A’s understanding of partner B’s OFK is colored by partner B’s self-perceived OFK (subjective financial knowledge [SFK]). Accordingly, SFK plays an important role in financial decisions that romantic partners jointly navigate. In a survey and an incentive-compatible lab experiment (both with couples), we find that partners’ SFK differences reliably predict their relative influence over shared financial decisions. Partners’ OFK differences generally played a more modest role in those shared decisions. However, when romantic partners individually make financial decisions, OFK plays a more prominent role. Thus, SFK appears to be particularly important in interpersonal contexts.

Date: 2023
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