ACCI Conference 2018

Melody Harvey, Jeremy Burke, Joyce Serido, Soyeon Shim - Consumers whose subjective financial knowledge exceeds their objective financial knowledge tend to make mistakes that impact their economic well-being. Much is known about how overconfidence impacts financial behaviors, but little is known about what factors shape it. Using the APLUS, we will estimate individual fixed-effects models to investigate how overconfidence and its components change with respects to financial education obtained, economic shocks experienced, and incidences of adverse financial practices. Descriptive statistics reveal that objective financial knowledge increased over time but subjective financial knowledge (and therefore overconfidence) decreased. At the onset of adulthood, high school financial education is not associated with objective financial knowledge, but is associated with higher subjective financial knowledge and overconfidence. Future analysis will account for poor financial behaviors and college-level financial education.

Winner of the National Endowment for Financial Education Paper Award