Pictorial Representation of Abstract Financial Concepts to Foster Financial Literacy

Awais Malik and Bärbel Fürstenau

MPRA Paper from University Library of Munich, Germany

Abstract: Financial literacy is crucial for making sound financial decisions and living a better life. However, the field of finance is full of abstract concepts, such as inflation, liquidity, asset allocation and credit. Abstract concepts may be harder to comprehend than concrete concepts. This is because abstract concepts lack tangible referents in the physical world, whereas concrete concepts (e.g., car or house) have a palpable form and can be directly experienced through our senses. Against this background, the question arises of how instructional material can be designed in a way that helps people acquire knowledge about abstract financial concepts. Multimedia learning theories suggest complementing verbal information with pictures that represent the respective topic or concept. Since abstract financial concepts lack palpable, concrete forms, these representational pictures are not simply available but have to be developed. Based on grounded cognition theory, this article discusses three approaches, including ‘situations’, ‘emotions’ and ‘metaphors’, which can be used to generate representational pictures of abstract financial concepts. This study aims to enhance our understanding of how to make effective pictures of abstract financial concepts and thus multimedia learning material, which in turn supports increasing people’s financial literacy.

Keywords: Abstract Financial Concepts; Financial Literacy; Multimedia Learning; Pictures; Financial Education (search for similar items in EconPapers)
JEL-codes: A20 (search for similar items in EconPapers)
Date: 2023-12
New Economics Papers: this item is included in nep-ban and nep-fle
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