TY - JOUR
T1 - Numeracy and wealth
AU - Estrada-Mejia, Catalina
AU - de Vries, Marieke
AU - Zeelenberg, Marcel
PY - 2016/6/1
Y1 - 2016/6/1
N2 - Numeracy is defined as the ability to understand and use numerical information. We examined the relationship between numeracy and wealth using a cross-sectional and a longitudinal study. For a sample of approximately 1000 Dutch adults, we found a statistically significant correlation between numeracy and wealth, even after controlling for differences in education, risk preferences, beliefs about future income, financial knowledge, need for cognition or seeking financial advice. Conditional on socio-demographic characteristics, our estimates suggest that on average a one-point increase in the numeracy score (11-point scale) of the respondent is associated with 5 percent more personal wealth. Additionally, we find that numeracy is a key determinant of the wealth accumulation trajectories that people follow over time. Over a 5-year period, while participants with low numeracy decumulate wealth, participants with high numeracy maintain a constant positive level of wealth.
AB - Numeracy is defined as the ability to understand and use numerical information. We examined the relationship between numeracy and wealth using a cross-sectional and a longitudinal study. For a sample of approximately 1000 Dutch adults, we found a statistically significant correlation between numeracy and wealth, even after controlling for differences in education, risk preferences, beliefs about future income, financial knowledge, need for cognition or seeking financial advice. Conditional on socio-demographic characteristics, our estimates suggest that on average a one-point increase in the numeracy score (11-point scale) of the respondent is associated with 5 percent more personal wealth. Additionally, we find that numeracy is a key determinant of the wealth accumulation trajectories that people follow over time. Over a 5-year period, while participants with low numeracy decumulate wealth, participants with high numeracy maintain a constant positive level of wealth.
KW - Cognitive ability
KW - Numeracy
KW - Wealth
KW - Wealth accumulation
UR - http://www.scopus.com/inward/record.url?scp=84961171914&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84961171914&partnerID=8YFLogxK
U2 - 10.1016/j.joep.2016.02.011
DO - 10.1016/j.joep.2016.02.011
M3 - Article
AN - SCOPUS:84961171914
SN - 0167-4870
VL - 54
SP - 53
EP - 63
JO - Journal of Economic Psychology
JF - Journal of Economic Psychology
ER -