Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250420 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14759
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Using data from 74 countries, we uncover important differences in the association between financial literacy and preferences by the level of economic development. We find that patience is only salient in wealthier countries, i.e. countries with their GDP per capita above the sample median. In such cases, countries with higher level of patience display higher levels of financial literacy. Importantly, this association is not driven by a multitude of institutional or cultural factors known to be related to financial literacy. In impoverished countries, we document a higher level of financial literacy in countries with higher levels of risk-taking but with lower levels of trust, positive reciprocity, and altruism. Countries' legal origin drives most of the association with risk-taking and about two fifths of the relationship with trust and positive reciprocity. At the same time, the country's religious composition drives the association between altruism and financial knowledge. Our findings underscore that financial education programs need to be tailored to the cultural aspect of group preferences and suggest what type of traits policies and programs ought to be reinforced in poorer countries.
Subjects: 
financial literacy
preferences
and economic development
JEL: 
D14
E2
I22
Document Type: 
Working Paper

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