Culture and Adult Financial Literacy: Evidence from the United States

Maddalena Davoli () and Núria Rodriguez-Planas

No 13349, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using a US nationally representative sample of over 6,000 adults from 26 countries of ancestry, we find a strong association between their financial literacy in the US and the financial literacy level in their self-reported country of ancestry. More specifically, if an individual from a country of ancestry with "average" financial literacy had instead come from a country with financial literacy one-standard deviation above the mean, his or her likelihood of answering correctly basic financial literacy questions regarding inflation, risk diversification, and interest rate in the US would have increased by 4 percentage points, a 9% increase relative to the average financial literacy in our sample of 43%. The cultural components behind this observed association include a strong emphasis on patience, long-term orientation and risk-aversion in the country of ancestry. We also find that the association is driven by financial literacy on risk diversification and interest compounding.

Keywords: economic decisions; culture; epidemiological approach; financial literacy (search for similar items in EconPapers)
JEL-codes: D14 E2 I22 Z10 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2020-06
New Economics Papers: this item is included in nep-fle and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in: Economics of Education Review, 2020, 78, 102013

Downloads: (external link)
https://docs.iza.org/dp13349.pdf (application/pdf)

Related works:
Journal Article: Culture and adult financial literacy: Evidence from the United States (2020)
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:iza:izadps:dp13349

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().