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Financial literacy, motivated reasoning, and gender: essays in behavioral economics
Linköping University, Department of Management and Engineering, Economics. Linköping University, Faculty of Arts and Sciences.
2019 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

I wrote this thesis to create a better understanding of how individual characteristics influence our feelings, our behavior and our way of interpreting information. My focus is on financial behavior and financial information, however I also consider a political context. I investigate the (usually) enabling abilities of financial literacy and numeracy. I also consider impediments such as stereotype threat and motivated reasoning, which can prevent people from engaging in certain behaviors or from interpreting information objectively. Both processes stem from valued beliefs and psychological foundations, consequently peoples’ efforts, decisions, and evaluations are based on them.

The first essay, “Competence, confidence, and gender: The role of perceived and actual financial literacy in household finance,” broadens our understanding of the benefits of financial competence. I contrast perceived and actual levels of financial literacy, and consider the role of numeracy and cognitive reflective ability. I conclude that perceived and actual levels of financial literacy positively affect behavior and wellbeing; however, perceived financial literacy more so than actual financial literacy. No such effect is observed for numeric ability and cognitive reflection. Furthermore, women are more anxious about financial matters even though they tend to engage more frequently in the considered financial behaviors.

The second essay, “Threatening finance? Examining the gender gap in financial literacy,” continues my exploration of the relationship between gender and financial literacy. In a series of studies, I investigate whether the observed gender gap in financial literacy can be identified in nonnumerical contexts, if it can be associated with confidence in financial matters, and if it can be attributed to stereotype threat, which posits that inbuilt prejudices about gender and finance undermine women’s performance of tasks that involve finance. The results show that the observed gender gap in financial literacy is robust even in nonnumerical financial contexts and suggest that a stereotype threat for women in the financial domain might be present. The gender gap in financial literacy could not be attributed to a difference in (displayed) confidence.

In the third essay, “Preferences for lump-sum over divided payment structures,” I investigate whether or not people display systematic preferences for lump–sum or divided payment structures and how these preferences differ in gain (benefit) and loss (payment) situations. I investigate what happens when payments belong to a single underlying event, such as when people can choose to pay immediately or in installments. I also examine whether or not individual differences in time preferences, risk preferences, numeracy, and financial literacy are associated with preferences for one payment structure or the other. The aggregate results show a tendency for people to prefer obtaining and paying money in lump sums. I find no systematic indication that the considered individual differences play a role in this type of decision.

The fourth essay, “Motivated reasoning when assessing the effect of refugee intake,” inquires into differences in worldview ideology, whether people identify as nationally or globally oriented, hinder them from objectively interpreting information. I use an experiment to find out if people display motivated reasoning when interpreting numerical information about the effects of refugees on the crime rate. Our results show evidence of motivated reasoning along the lines of worldview ideology. However, individuals with higher numeric ability were less likely to engage in motivated reasoning, leading to the conclusion that motivated reasoning is more likely to be driven by feelings and emotional cues than by deliberate analytical processes.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2019. , p. 16
Series
Linköping Studies in Arts and Sciences, ISSN 0282-9800 ; 770
Keywords [en]
Financial Literacy, Financial Behavior, Financial Well-being, Motivated Reasoning, Gender Differences, Behavioral Economics, Experiments
National Category
Economics
Identifiers
URN: urn:nbn:se:liu:diva-156648DOI: 10.3384/diss.diva-156648ISBN: 9789176850602 (print)OAI: oai:DiVA.org:liu-156648DiVA, id: diva2:1313407
Public defence
2019-06-05, A1, Hus A, Campus Valla, Linköping, 10:00 (English)
Opponent
Supervisors
Available from: 2019-05-03 Created: 2019-05-03 Last updated: 2019-05-16Bibliographically approved
List of papers
1. Motivated reasoning when assessing the effects of refugee intake
Open this publication in new window or tab >>Motivated reasoning when assessing the effects of refugee intake
2018 (English)In: Behavioural Public Policy, ISSN 2398-063XArticle in journal (Refereed) Epub ahead of print
Abstract [en]

Do differences in worldview ideology hinder people from objectively interpreting the effect of immigration? In an experiment with Swedish adults (n = 1015), we investigate whether people display motivated reasoning when interpreting numerical information about the effects of refugee intake on crime rate. Our results show clear evidence of motivated reasoning along the lines of worldview ideology (i.e., whether people identify themselves primarily as nationally oriented or globally oriented). In scenarios where refugee intake was associated with higher crime rate, nationally oriented people were 18 percentage points more likely to make the correct assessment compared to globally oriented people. Likewise, in scenarios where refugee intake was associated with lower crime rate, nationally oriented people were 20 percentage points less likely to make the correct assessment compared to globally oriented people. Individuals with higher numeric ability were less likely to engage in motivated reasoning, suggesting that motivated reasoning more commonly is driven by feelings and emotional cues rather than deliberate analytical processes.

Place, publisher, year, edition, pages
Cambridge University Press, 2018
Keywords
Motivated reasoning; partisan bias; politics; immigration; experiment
National Category
Economics Psychology (excluding Applied Psychology) Political Science (excluding Public Administration Studies and Globalisation Studies)
Identifiers
urn:nbn:se:liu:diva-155088 (URN)10.1017/bpp.2018.41 (DOI)
Available from: 2019-03-15 Created: 2019-03-15 Last updated: 2019-08-12Bibliographically approved

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