Figure 1.
Figure 2.
Figure 3.
Definitions of variables in study
| Variable | Definition |
|---|---|
| female | dummy variable for gender: 0 indicating male and 1 indicating female |
| indigenous | dummy variable for self-identification of being indigenous Australian: 0 indicating no and 1 indicating yes |
| above20 | dummy variable for being 20 years old or above: 0 indicating no and 1 indicating yes |
| non_English | dummy variable for speaking a language other than English at home: 0 indicating no and 1 indicating yes |
| paid_work | dummy variable for doing paid work: 0 indicating no and 1 indicating yes |
| study_biz | dummy variable for studying business at university: 0 indicating no and 1 indicating yes |
| self_rate_avg | the average self-rating on the level of understanding of eight aspects of financial literacy (i.e., budgeting, saving, managing debt, investing, retirement planning, taxation, insurance, and superannuation) each on a five-band Likert scale (i.e., 1 – very low, 2 – low, 3 – fair, 4 – high, and 5 – very high) |
| test_overall | the total number of correct answers to a panel of 14 quizzes on various aspects of financial literacy |
| rescaled_test_overall | Rescaled test_overall to a range between 1 and 5: rescaled_test_overall = 4 x test_overall / 14 + 1 |
| overconfidence | overconfidence in financial literacy: overconfidence = self_rate_avg - rescaled_test_overall |
Operationalisation of financial literacy constructs
| Constructs | Questions | Source |
|---|---|---|
| Budgeting, saving, managing debt | 1. Compound interest | Lusardi and Mitchell, 2009 |
| 2. Inflation | Lusardi and Mitchell, 2009 | |
| 3. Budgeting | Mandell, 2008 | |
| 4. Borrowing | Mandell, 2008 | |
| 5. Credit card debt | Mandell, 2008 | |
| Investing | 6. Risky assets | Lusardi and Mitchell, 2009 |
| 7. Long period returns | Bateman, et al., 2012 | |
| Superannuation, retirement planning, and insurance knowledge | 8. Performance indicator | ANZ, 2011 |
| 9. Concessional tax rate | Chardon, 2014 | |
| 10. Life insurance need | Mandell, 2008 | |
| 11. Car insurance | Mandell, 2008 | |
| Taxation knowledge | 12. Assessable income | Chardon, 2014 |
| 13. Tax payable | Chardon, 2014 | |
| 14. Negative gearing | Chardon, 2014 |
Numerical summary of self-rated and tested levels of financial literacy in sample
| Variable | N | M | Mdn | SD | Skew | Kurt | Min | Max | Q1 | Q3 |
|---|---|---|---|---|---|---|---|---|---|---|
| self_rate_avg | 363 | 2.68 | 2.50 | .79 | .62 | .19 | 1.00 | 5.00 | 2.13 | 3.13 |
| test_overall | 316 | 6.70 | 7.00 | 2.75 | .02 | -.49 | .00 | 13.00 | 5.00 | 9.00 |
| Overconfidence | 316 | -.23 | -.25 | .80 | .35 | .15 | -2.32 | 2.09 | -.79 | .23 |
Regression coefficient estimates
| B | β | t | p | |
|---|---|---|---|---|
| Constant | -.504 | - | -4.090 | <.001*** |
| female | .139 | .071 | 1.230 | .220 |
| Indigenous | -.063 | -.013 | -.222 | .824 |
| above20 | -.073 | -.045 | -.792 | .429 |
| non-English | .466 | .184 | 3.193 | .002*** |
| paid_work | .187 | .111 | 1.897 | .059* |
| study_biz | .080 | .035 | .612 | .541 |
Seemingly unrelated regressions of self-rated and tested levels of financial literacy
| Unconstrained model | Constrained model | |||||||
|---|---|---|---|---|---|---|---|---|
| self_rate_avg | p | rescaled_test_overall | p | self_rate_avg | p | rescaled_test_overall | p | |
| female | -.454 | <.001 | -.594 | <.001 | -.526 | <.001 | -.526 | <.001 |
| indigenous | .347 | .193 | .409 | .117 | .379 | .090 | .379 | .090 |
| above20 | .195 | .024 | .268 | .002 | .233 | .001 | .233 | .001 |
| non_English | .299 | .030 | -.168 | .214 | .268 | .052 | -.139 | .304 |
| study_biz | .057 | .644 | -.023 | .849 | .016 | .880 | .016 | .880 |
| paid_work | .241 | .009 | .055 | .550 | .145 | .064 | .145 | .064 |
| constant | 2.748 | <.001 | 3.251 | <.001 | 2.86 | <.001 | 3.14 | <.001 |
| χ2(d.f.), p | 35.37(6) | <.001 | 46.28(6) | <.001 | 55.22(6) | <.001 | 50.67(6) | <.001 |
| R-squared | .105 | .133 | .099 | .128 | ||||
| residuals r, p | .441, <.001 | .432, <.001 | ||||||
| joint constraints test: χ2(d.f.), p | n.a. | 7.09(5),.214 | ||||||
Demographics of respondents
| Demographics | Frequency | Per cent % (n=302) |
|---|---|---|
| Female | 238 | 79 |
| Indigenous | 8 | 3 |
| 20 yrs and above | 133 | 44 |
| Non-English at home | 33 | 11 |
| Paid work | 203 | 67 |
| Studying business | 42 | 14 |
| Living at home | 170 | 56 |