Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283612 
Year of Publication: 
2023
Series/Report no.: 
ZEW Discussion Papers No. 23-074
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
We examine the financial resilience of Austrian households, relating it to their experience of financial shocks earlier in life and to their financial literacy. We find that previous negative (positive) financial shocks are negatively (positively) related to financial resilience. Financial literacy and households' financial resilience are positively related. Based on a randomized survey experiment, we investigate the role of over-optimism when evaluating the potential impact of future events on households' financial situation. Households are asked to assess specific risks for their own household (treatment) or for a household with similar characteristics (control). On average, households assign a lower probability to shocks that negatively affect personal finances if asked for their own household compared to a similar household. We do not find the reverse effect for positive shocks. We find a negative correlation between over-optimism and financial literacy, indicating that financial literacy is relevant to both, financial behavior and the ability to assess financial shocks.
Subjects: 
financial fragility
expectations
risk assessment
financial behavior
over-optimism
JEL: 
D14
D91
G53
Document Type: 
Working Paper

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