RELATIONSHIP OF SUBJECTIVE AND OBJECTIVE FINANCIAL KNOWLEDGE WITH COLLEGE STUDENT FINANCIAL BEHAVIORS
Presented by Rich Stebbins (other authors: Cliff Robb and Lloyd Zimmerman)
OVERVIEW
 This study examines the relationship of objective
and subjective financial knowledge on reported
financial behavior in college students.
 Objective financial knowledge and/or subjective
knowledge may influence financial behavior.
 The more you know, the more you realize you
don’t know.
METHODS
 College students surveyed on:
 Objective financial knowledge
 Subjective knowledge
 Combined to create 4 groups
 High objective, high subjective
 High objective, low subjective
 Low objective, high subjective
 Low objective, low subjective
 4 logistic regressions
 Examined behavior attitudes – worry/concern about:
1. late payments.
2. lack of emergency funds.
3. living paycheck to paycheck.
4. presence of high interest loans.
H1: Higher objective knowledge, ceteris paribus, will
exhibit more positive financial behavior attitudes.
H2: Higher subjective knowledge relative to their
objective knowledge, i.e., overconfident, will exhibit
less positive financial behavior.
CLINICAL IMPLICATIONS
 Educating clients may allow them to become more
aware of everything that planners do.
 In addition, these educated clients will realize how
little they actually know about the full depth of all
that goes into financial planning techniques.
 Improving the planner/client dynamic will result in
more positive outcomes.
RESULTS
Knowledge
Comparison by
Sample
Student Sample
(n = 327)
Question 1 Correct
Question 2 Correct
Question 3 Correct
Question 4 Correct
Question 5 Correct
HOHS
HOLS
LOHS
LOLS
Mean Knowledge (0-5)
87.2
67.6
27.5
74.9
55.9
5.5
40.9
3.4
50.1
3.13 (1.34)
Mean Confidence (1-7) 4.38 (1.07)
Logistic Regressions
Variable
Know
Confidence
Combinations (Ref:
LOLS)
HOHS
HOLS
LOHS
Subjective Beliefs
MM affects future
Fin satisfaction
Day to day
Good at math
Read news
No Emergency
Fund
National Financial NFCS Restricted to
Confidence Survey 18-24 year olds
(NFCS) Full Sample (n = 2,581)
(n = 25,509)
76.9
65.6
64.1
35.1
29.4
17.3
77.6
59.0
51.2
30.1
22.1
5.9
20.1
10.6
18.6
21.4
39.2
62.1
2.99 (1.45)
2.07 (1.35)
NFCS Restricted
to Full Time
Students
(n = 1,091)
72.1
49.9
19.25
67.2
41.06
9.7
17.5
18.9
53.9
2.49 (1.39)
5.17 (1.28)
4.88 (1.29)
4.78 (1.37)
Late Payments
Paycheck to
Paycheck
High Interest
Loans
B
-0.17
-0.42*
Odds
0.84
0.66
B
0.04
-0.49*
Odds
1.04
0.61
B
-0.16
-0.31Ɨ
Odds
0.85
0.73
B
-0.13
-0.31Ɨ
Odds
0.87
0.73
1.64Ɨ
0.58
1.69Ɨ
5.15
1.79
5.41
0.64
0.01
0.31
1.90
1.01
1.36
0.94
0.04
1.90*
2.56
1.04
6.71
0.12
0.23
0.23
1.13
1.25
1.25
0.76*
-1.21***
0.07
0.02
0.19*
2.15
0.30
1.08
1.02
1.21
0.33
-0.99***
-0.02
0.07
0.12
1.41
0.37
0.98
1.08
1.13
0.07
-1.34***
0.19
0.02
0.01
1.08
0.26
1.20
1.02
1.01
0.64*
-0.74***
0.24
0.08
0.18
1.90
0.48
1.28
1.08
1.20