nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2021‒11‒15
four papers chosen by

  1. Financial Literacy and Consumer Financial Well-being in Ghana: Any Nexus with Economic Stability? By Matey, Juabin
  2. Cognitive ability, financial literacy, and narrow bracketing in time-preference elicitation By Oberrauch, Luis; Kaiser, Tim
  3. Economic education at the expense of indoctrination? Evidence from Germany By Kaiser, Tim; Oberrauch, Luis
  4. The political implication of women and industrialisation in Africa By Tii N. Nchofoung; Simplice A. Asongu; Vanessa S. Tchamyou

  1. By: Matey, Juabin
    Abstract: Despite persistent efforts to deal with life's economic challenges, most Ghanaians are financially insecure, making the pursuit of lifelong goals more difficult. Given these realities, financial literacy and consumer financial stability appear viable strategies for promoting economic stability. This is because financial literacy can serve as a conduit for informed financial decisions at both the household and macroeconomic levels. A high human development index is an indication of a better welfare of the citizenry in the country. As a result, linking household decisions to broader policy outcomes is inevitable. In this work, efforts are made to establish a link between financial literacy and consumer financial stability and their relationships with macroeconomic stability. One relevant finding is that financial literacy has a significant positive association with economic stability as measured by citizens' welfare. This discovery has several ramifications for national financial literacy initiatives. There appears to be an insignificant relationship between consumer well-being and economic stability, although positive. Nonetheless, it demonstrates how a financially secure consumer can boost aggregate demand by spending more, impacting job creation and macroeconomic growth. The Probit-Regression method facilitated data analysis using a participant population of 960 across eight studied regions in Ghana. Reasoning from these findings, national governments should take advantage of the favourable relationship between financial literacy and consumer financial stability on one hand, and national economic stability on the other seriously, as aggregate consumption volatility is lower in countries with a high level of financial literacy, which is reflected in individual saving and investment behaviour. As such, policy efforts should consider the relationship between microeconomic actions and macroeconomic outcomes since the former influences the latter.
    Keywords: Financial literacy, Consumer financial stability, Economic stability, Household theory. Macroeconomic-level Microeconomic-level
    JEL: D1 D11 D12 D14 I3 I31
    Date: 2021–10–23
  2. By: Oberrauch, Luis; Kaiser, Tim
    Abstract: We study the role of cognitive ability and financial literacy for inter-temporal decision-making using an adapted version of the Convex Time Budget Protocol. We document substantial heterogeneity in choice-patterns and estimated parameters at the individual-level: We find that subjects with higher cognitive ability and domain specific-knowledge are more likely to make patient inter-temporal choices, to allocate the entire budget to a single payment-date, and to allocate the entire budget to corner choices as interest rates increase. At the same time, domain specific knowledge is uncorrelated with choice consistency and estimated individual error parameters, suggesting these results are not driven by a reduction in random noise among high ability respondents. These results serve as suggestive evidence for inter-temporal arbitrage among high ability respondents, thereby revealing a potential confound in time-preference elicitation tasks relying on time-dated monetary rewards.
    Keywords: Intertemporal choice,cognitive ability,financial literacy,narrow bracketing,arbitrage
    JEL: G53 D15 D91
    Date: 2021
  3. By: Kaiser, Tim; Oberrauch, Luis
    Abstract: We study the impact of a recent curriculum reform introducing mandatory economic education in higher-track secondary schools in Southwest Germany. The curriculum reform provides the opportunity to leverage the exogenous variation in exposure to economic education relative to the previous cohort not affected by the reform. One year after exposure to the mandate, we observe positive treatment effects on test scores measuring cognitive elements of economic competence only for students with high test scores at baseline. Two years after exposure to the mandate, we find positive treatment effects on test scores across the entire distribution, as well as socio-emotional skills relevant to financial decision making while we do not observe effects on self-reported financial behaviors. At the same time, we find no changes in social preferences and normative attitudes that could give rise to concerns of indoctrination effects regarding students’ views on profit maximization and the market mechanism.
    Keywords: Economic education,financial literacy,impact evaluation,social preferences,indoctrination,financial behaviors
    JEL: A21 G53 I21
    Date: 2021
  4. By: Tii N. Nchofoung (University of Dschang, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon)
    Abstract: This study examines the effect of political implications of women on industrialisation in Africa. The results after controlling for cross-sectional dependency show that women political implication Granger causes industrialisation in Africa. Besides, the Fixed effect Driscoll/Kraay standard error estimator reveal that women political empowerment negatively affect industrialisation in Africa. These negative effects are nullified by high economic freedom and high female economic participation in the economy. The investment freedom thresholds require for the negative net effects to be nullified are 52.30469, 55.51639, 49.324895, and 55.594059 respectively for the women political empowerment index, women civil liberty, women political participation and women civil society participation interactions; while when women economic participation rates of 43.0777, 35.82, and 46.9 are attained for women political empowerment index, women civil liberty and women civil society participation respectively, complementary policies are needed for a positive effect on industrialisation. The study implores policy makers to improve on the economic freedom of the countries and to elaborate on policies that favour women economic inclusion, if policy towards political inclusion is foreseen in the industrialisation agenda.
    Keywords: political empowerment; women; industrialisation; Africa
    JEL: G20 I10 I32 O40 O55
    Date: 2021–10

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