Financial Knowledge And Behavior Indicates Individuals Essay

1111 Words Dec 1st, 2015 null Page
Research on financial knowledge and behavior indicates individuals in both developed and developing countries lack adequate knowledge to make informed financial decisions, especially subgroups like the young, women, and the less educated. When resorting to financial education programs, we can’t clearly figure out their efficiency. To expand our knowledge on the topic, we propose a financial education program with the treatment effect to test out its impacts on financial behaviors of young people. With long-term implementation, we hope to largely increase financial knowledge of young people and to shed light onto the effect in the long run.
Facts about Financial Literacy
Financial knowledge is especially important in times where increasingly complex financial products are easily available to a wide range of the population. However, empirical evidence summarized in Lusardi and Mitchell (2014) shows that about half adult U.S. residents are financially illiterate. Their computation skills and knowledge about debts, inflation and risk are not sufficient enough to let them answer evaluation questions correctly, in other words, to make financial decisions wisely.
Financial Illiterate Subgroups
While financial illiteracy is widespread, it is also concentrated among specific population, as Lusardi and Mitchell commented in their study. Financial literacy rates differ in important ways when it comes to characteristics such as age, gender, education level, and income. Young and old…

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