 Know more, spend more?: The impact of financial literacy on household consumptionM. Dinkova, Adriaan Kalwij and Rob Alessie Working Papers from Utrecht School of Economics Abstract: This paper examines the relationship between household consumption and financial literacy for Dutch households. The economic framework is a simple life-cycle model of consumption in which financial literacy affects the rate of return on assets. The theoretical predictions are that financial literacy and consumption levels are positively correlated for plausible values of the intertemporal elasticity of substitution and that financial literacy and consumption growth are positively correlated. We use Dutch data from the LISS household panel to empirically test our theoretical predictions. Our results provide evidence for a strong positive association between couples’ non-durable consumption and the level of the male partner’s financial literacy. We did not find evidence for an association between consumption growth and financial literacy. Our results are robust to including household assets, interest in financial literacy and to examining different stages of the life-cycle. Keywords: life-cycle model; financial literacy; self-assessed financial literacy; household consumption (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:use:tkiwps:1914 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in Working Papers from Utrecht School of Economics Contact information at EDIRC. |
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