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Knowledge and Practice: Implications for Cash and Credit Management Behaviors
Author(s) -
Woodyard Ann Sanders,
Robb Cliff,
Babiarz Patryk,
Jung Jiyoung
Publication year - 2017
Publication title -
family and consumer sciences research journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.372
H-Index - 31
eISSN - 1552-3934
pISSN - 1077-727X
DOI - 10.1111/fcsr.12202
Subject(s) - overconfidence effect , cash , payment , overdraft , sample (material) , actuarial science , business , credit card , logistic regression , finance , psychology , social psychology , computer science , chemistry , chromatography , machine learning
This study explored the relationships between subjective and objective financial knowledge with cash and credit behavior. A nationally representative sample of American consumers over the age of 18 were surveyed online in 2012 about four financial behaviors: (1) maintenance of an emergency account, (2) prompt payment of credit card balances, (3) checking credit reports, and (4) avoiding checking account overdrafts. The results of logistic regressions indicated that higher levels of both objective and subjective knowledge were significant indicators of positive financial behavior and avoidance of negative behavior. However, a “false‐positive” condition of high subjective knowledge and low objective knowledge demonstrated questionable cash and credit behavior linked to overconfidence. This suggests that financial counselors and financial therapists could provide assistance in helping consumers improve their subjective and objective knowledge to reinforce positive cash and credit behavior, which should improve consumer decision making.