Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223791
Authors: 
Davoli, Maddalena
Rodríguez-Planas, Núria
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers 13349
Abstract: 
Using a US nationally representative sample of over 6,000 adults from 26 countries of ancestry, we find a strong association between their financial literacy in the US and the financial literacy level in their self-reported country of ancestry. More specifically, if an individual from a country of ancestry with "average" financial literacy had instead come from a country with financial literacy one-standard deviation above the mean, his or her likelihood of answering correctly basic financial literacy questions regarding inflation, risk diversification, and interest rate in the US would have increased by 4 percentage points, a 9% increase relative to the average financial literacy in our sample of 43%. The cultural components behind this observed association include a strong emphasis on patience, long-term orientation and risk-aversion in the country of ancestry. We also find that the association is driven by financial literacy on risk diversification and interest compounding.
Subjects: 
financial literacy
culture
epidemiological approach
economic decisions
JEL: 
D14
E2
I22
Z10
Document Type: 
Working Paper

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