期刊
JOURNAL OF PENSION ECONOMICS & FINANCE
卷 14, 期 4, 页码 332-368出版社
CAMBRIDGE UNIV PRESS
DOI: 10.1017/S1474747215000232
关键词
Financial knowledge; numeracy; debt loads; credit card borrowing
资金
- FINRA Investor Education Foundation
- HBS Division of Research and Faculty Development
We analyze a national sample of Americans with respect to their debt literacy, financial experiences, and their judgments about the extent of their indebtedness. Debt literacy is a component of broader financial understanding that measures knowledge about debt and self-assessed financial knowledge. Financial experiences are the participants' reported experiences with traditional borrowing, alternative borrowing, and investing. Overindebtedness is a self-reported measure. Debt literacy is low, with only about one-third of the population grasping the basics of interest compounding. Even after controlling for demographics, we find a relationship between debt literacy and both financial experiences and debt loads. Individuals with lower levels of debt literacy tend to transact in high-cost manners, incurring higher fees and using high-cost borrowing. We provide a rough estimate of the national implications of debt ignorance on credit card costs by consumers. Less knowledgeable individuals also report that their debt loads are excessive or that they are unable to judge their debt position.
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