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Financial overconfidence, promotion of financial advice, and aging

Author

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  • García, J.
  • Gómez, Y.
  • Vila, J.

Abstract

This paper proposes and validates a method to measure financial overconfidence in older people through incentivized economic experiments instead of answers to hypothetical questions. Specifically, financial overconfidence is quantified in terms of incorrect answers to a standardized financial literacy questionnaire on which participants reject the help of a financial advisor (overconfidence based on advice aversion) or declare that they are confident that they know the right answer (overconfidence based on confidence self-assessment). Using experimental data from a sample of 295 older Internet users in Spain, analysis shows that the two proposed behavioral measures of financial overconfidence are consistent. Moreover, the analysis confirms the well-documented finding of financial overconfidence in older people. The estimation of two analysis of covariance (ANCOVA) models suggests that, among older people, overconfidence decreases with age and education level (i.e., university studies). However, no statistically significant effect of gender on overconfidence level is found.

Suggested Citation

  • García, J. & Gómez, Y. & Vila, J., 2022. "Financial overconfidence, promotion of financial advice, and aging," Journal of Business Research, Elsevier, vol. 145(C), pages 325-333.
    • Handle: RePEc:eee:jbrese:v:145:y:2022:i:c:p:325-333
    DOI: 10.1016/j.jbusres.2022.02.068
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    2. Fuzhong Chen & Yingchao Fan & Guohai Jiang & Jinwei Chen, 2024. "How Overconfident Financial Knowledge Hinders Retirement Planning? Mediating Analysis and Heterogeneity of Retirement Funding Sources," SAGE Open, , vol. 14(2), pages 21582440241, April.
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    More about this item

    Keywords

    Financial overconfidence; Financial advice; Aging;
    All these keywords.

    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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