The Causal Effects of Confidence Awareness on Financial Literacy and Behaviour

Ana Lleó-Bono, Ines Lee, Eileen Tipoe and Christopher Rauh

No 1522, Working Papers from Barcelona School of Economics

Abstract: This paper examines whether increasing individuals' awareness of their own confidence can influence financial behaviour. In a pre-registered online experiment with nearly 3,000 U.S. adults, we test the effects of a novel metacognitive intervention: personalised feedback on implicit confidence about one's financial abilities, as measured by a custom Implicit Association Test (IAT), paired with an explanation of the importance of self-confidence in financial abilities. Treated participants show a significant reduction in "don't know" responses on financial literacy tests and their performance in an incentivised investment task significantly improves: treated participants are less likely to make clearly dominated choices, more likely to select efficient allocations, and choose portfolios closer to the efficient frontier. These effects persist two weeks later in a follow-up survey with obfuscated framing. Heterogeneity analyses show stronger effects for females and for participants who understate their confidence (i.e. whose reported confidence is lower than what their IAT suggests).

Keywords: confidence; financial literacy; onfidence awareness; personal finance; survey experiments (search for similar items in EconPapers)
JEL-codes: D14 D83 D91 G11 G53 (search for similar items in EconPapers)
Date: 2025-10
New Economics Papers: this item is included in nep-exp, nep-fle and nep-pay
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