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Financial literacy, confidence and financial advice seeking

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  • Kramer, Marc M.

Abstract

We find that people with higher confidence in their own financial literacy are less likely to seek financial advice, but no relation between objective measures of literacy and advice seeking. The negative association between confidence and advice seeking is more pronounced among wealthy households. We base these findings on the analysis of two rich data sources from the Netherlands: the DNB Household survey and a sample of investors from a large Dutch retail bank. Our results imply that policy makers should be careful to put financial advice forward as a mechanism to curb the ill effects of low financial literacy and that steering people towards more accurate self-assessments seems a more promising route.

Suggested Citation

  • Kramer, Marc M., 2016. "Financial literacy, confidence and financial advice seeking," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 198-217.
    • Handle: RePEc:eee:jeborg:v:131:y:2016:i:pa:p:198-217
    DOI: 10.1016/j.jebo.2016.08.016
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    More about this item

    Keywords

    Household finance; Financial advice; Financial literacy; Confidence;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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