The Geography of Financial Literacy

dc.creator	Christopher Bumcrot
dc.creator	Judy Lin
dc.creator	Annamaria Lusardi
dc.date	2013-07-01T00:00:00Z
dc.date.accessioned	2015-07-20T22:10:18Z
dc.date.available	2015-07-20T22:10:18Z
dc.identifier	http://dx.doi.org/10.5038/1936-4660.6.2.2
dc.identifier	1936-4660
dc.identifier	https://doaj.org/article/e5ad921c0e1e44789c66000a31bb066e
dc.identifier.uri	http://evidence.thinkportal.org/handle/123456789/13529
dc.description	This paper explores how well equipped today’s households are to make complex financial decisions in the face of often high-cost and high-risk financial instruments. Specifically we focus on financial literacy. Most importantly, we describe the geography of financial literacy, i.e., how financial literacy is distributed across the fifty US states. We describe the correlation of financial literacy and some important aggregate variables, such as state-level poverty rates. Finally, we examine the extent to which differences in financial literacy can be explained by states’ demographic and economic characteristics. To assess financial literacy, five questions were added to the 2009 National Financial Capability Study, covering fundamental concepts of economics and finance encountered in everyday life: simple calculations about interest rates and inflation, the workings of risk diversification, the relationship between bond prices and interest rates, and the relationship between interest payments and maturity in mortgages. We constructed an index of financial literacy based on the number of correct answers provided by each respondent to the five financial literacy questions. The financial literacy index reveals wide variation in financial literacy across states. Much of the variation is attributable to differences in the demographic makeup of the states; however, a handful of states have either higher or lower levels of financial literacy than is explained by demographics alone. Also, there is a significant correlation between the financial literacy of a state and that state’s poverty level. The findings indicate directions for policy makers and practitioners interested in targeting areas where financial literacy is low.
dc.language	English
dc.publisher	University of South Florida Libraries
dc.relation	http://scholarcommons.usf.edu/numeracy/vol6/iss2/art2/
dc.relation	https://doaj.org/toc/1936-4660
dc.rights	CC BY-NC
dc.source	Numeracy, Vol 6, Iss 2, p 2 (2013)
dc.subject	financial literacy
dc.subject	financial capability
dc.subject	Special aspects of education
dc.subject	LC8-6691
dc.subject	Education
dc.subject	L
dc.subject	DOAJ:Education
dc.subject	DOAJ:Social Sciences
dc.subject	Mathematics
dc.subject	QA1-939
dc.subject	Science
dc.subject	Q
dc.subject	DOAJ:Mathematics
dc.subject	DOAJ:Mathematics and Statistics
dc.subject	Special aspects of education
dc.subject	LC8-6691
dc.subject	Education
dc.subject	L
dc.subject	DOAJ:Education
dc.subject	DOAJ:Social Sciences
dc.subject	Mathematics
dc.subject	QA1-939
dc.subject	Science
dc.subject	Q
dc.subject	DOAJ:Mathematics
dc.subject	DOAJ:Mathematics and Statistics
dc.subject	Special aspects of education
dc.subject	LC8-6691
dc.subject	Education
dc.subject	L
dc.subject	Mathematics
dc.subject	QA1-939
dc.subject	Science
dc.subject	Q
dc.subject	Special aspects of education
dc.subject	LC8-6691
dc.subject	Education
dc.subject	L
dc.subject	Mathematics
dc.subject	QA1-939
dc.subject	Science
dc.subject	Q
dc.subject	Special aspects of education
dc.subject	LC8-6691
dc.subject	Education
dc.subject	L
dc.subject	Mathematics
dc.subject	QA1-939
dc.subject	Science
dc.subject	Q
dc.title	The Geography of Financial Literacy
dc.type	article