Exponential Growth Bias and Financial Literacy
نویسندگان
چکیده
Exponential Growth Bias and Financial Literacy The tendency to underestimate the future value of a variable growing at a constant rate, an example of exponential growth bias, has been linked to household financial decision making. We show that exponential growth bias and standard measures of financial literacy are negatively correlated in a representative sample of Swedish adults. Since financial literacy is linked to household decision making, our results indicate that examining the relationship between exponential growth bias and household finance without adequate controls for financial literacy may generate biased results. JEL Classification: D12, D14
منابع مشابه
Exponential Growth Bias and Household Finance
We document two widespread biases in how consumers perceive the costs and benefits of borrowing and saving, and explore the implications of these biases for household finance. Payment/interest bias is the systematic tendency to underestimate a loan interest rate given other loan terms. Future value bias is the systematic tendency to underestimate a future value given a present value, time horiz...
متن کاملMeasuring the Effectiveness of Financial Literacy Programs in Ghana
This paper explores the effectiveness of financial literacy programs. It further seeks to establish the relationship between financial literacy and certain demographic characteristics. This study adopted a correlational research design as the framework to examine the relationship between variables without determining cause and effect. Data were randomly collected from 235 petty traders in Kumas...
متن کاملDeterminants of Financial Literacy and Use of Financial Services: An Empirical Study amongst the Unorganized Sector Workers in Indian Scenario
The present paper aims to identify the effect of demographic and socio-economic variables on financial literacy and its impact on the use of financial services. For this study, primary data are collected from 400 unorganized sector workers of Paschim Medinipur district, also an economically development lagger in the state of West Bengal of India. The logit regression result shows that the main ...
متن کاملAssessing Mediating Role of Financial Satisfaction in the Relationship Between Financial Literacy and Quality of Life Among Retired Older Adults
Objective: Quality of life in old age is of major importance because the world population is aging rapidly. Financial satisfaction is one of the important components of quality of life. So, the present study was aimed to determine the association between financial literacy and quality of life with mediating role of financial satisfaction among retired older adults residing in Qazvin, Iran. Met...
متن کاملThe Effects of the CEO’s Perceptual Bias in Economic Decision-Making and Judgment on the Capabilities of the Financial Reporting Quality
The current research sets out to identify and scrutinize the impact of the CEO’s perceptual biases in judgment and economic decision-making on the reporting quality of the firms listed on the Tehran Stock Exchange. Adopting a mixed method, the present study first seeks to detect the components and indices of CEO’s perceptual biases via critical appraisal and with the special participation of 10...
متن کامل