The relationships of financial literacy with both financial behavior and financial well-being: Meta-analyses based on the selective literature review

This study conducted meta-analyses of the relationships between financial literacy and both financial behavior and financial well-being. Peer-reviewed articles published on financial literacy in the field of consumer studies were collected by July 29, 2020. Fourteen articles were eligible for the meta-analyses. The results showed positive relationships of financial knowledge with desirable financial behavior and financial well-being. Our comparison of objective and subjective financial knowledge indicated that subjective knowledge had stronger relationships with both financial behavior and financial well-being than objective knowledge. These two types of knowledge also had different paths to financial well-being in that subjective knowledge had both direct and indirect effects on financial well-being through financial behavior, whereas objective knowledge only had an indirect effect. The relationship between financial knowledge and financial behavior appeared stronger in cross-sectional data than in longitudinal data. The implications of these results and possible directions for future consumer science research were discussed.     

After the global financial crash: Individual factors differentiating young adult consumers’ trust in banks and financial institutions

Our exploratory study aims to examine individual factors that may differentiate young adults’ trust in banks and financial institutions. We use a longitudinal data set compiled during two, timed surveys, before and after the collapse of the nation’s financial system. Participants (N=748) were classified into three groups distinguished according to their differing levels of trust. Findings based on ANOVA and three-group discriminant analyses indicate that several individual factors – self-reported well-being (overall well-being, financial well-being, subjective financial knowledge) and financial status (determined by parents’ socioeconomic status and total debt level) – significantly influence young adult consumers’ level of trust in banks and financial institutions.     

Religion's influence on the financial well-being of consumers: A conceptual framework and research agenda

Religion is an indelible force in society, yet research examining its influence on consumption, particularly in the context of financial well-being is lacking. Thus, this paper presents a conceptual framework of factors influencing, and outcomes associated with, the effects of religion on financial well-being. Specifically, this paper introduces a conceptual framework aimed at understanding how religion influences financial decisions and well-being, both from a consumer and a business perspective. Focus groups were conducted with consumers and financial practitioners to support the development of the conceptual framework. Most novel to this framework is the identification of potential process mechanisms explaining this relationship, including trust, affect, risk propensity, and perceived personal control. The framework concludes with potential interventions targeted at consumers and businesses to improve financial well-being. This propositions-based conceptual framework serves as a research agenda to guide and aid scholars, consumer advocacy groups, policymakers, and marketers in promoting greater financial well-being.     

Entrepreneurship and eudaimonic well-being: Five venues for new science

Researchers in entrepreneurial studies are increasingly interested in the psychological well-being of entrepreneurs. Approaches to well-being tend to be partitioned into hedonic and eudaimonic formulations. Most entrepreneurial studies have focused on hedonic indicators (life satisfaction, happiness, positive affect). The central objective of this essay is to examine the relevance of eudaimonic well-being for understanding entrepreneurial experience. The theoretical background and key dimensions of eudaimonic well-being are described and their relevance for entrepreneurial studies is considered. Illustrative findings from prior well-being studies are examined, also with emphasis on possible extensions to entrepreneurship. Five key venues for the entrepreneurial field are then considered: (1) entrepreneurship and autonomy, viewed both as a motive (self-determination theory) and as an aspect of well-being (eudaimonic well-being theory); (2) varieties of entrepreneurship (opportunity versus necessity) and eudaimonic well-being; (3) eudaimonia in the entrepreneurial journey (beginning, middle, end); (4) entrepreneurship, well-being and health; and (5) entrepreneurs and the eudaimonia of others – contrasting virtuous and vicious types. In each topic, extant findings from entrepreneurial studies are considered and new research directions proposed. The overall aim is to be generative regarding the interplay between entrepreneurial experience and eudaimonic well-being.Executive summaryAlthough there is growing research on the psychological well-being of entrepreneurs, most studies to date have focused on hedonic conceptions of well-being. However, key aspects of eudaimonic well-being (e.g., realization of personal potential, purposeful life engagement, effective management of complex environments) have received little attention even though they may be particularly relevant to entrepreneurial pursuits. To address this issue, the theoretical foundation of a widely-used eudaimonic model is briefly described along with its empirical operationalization. Illustrative findings generated with this model are noted, and their relevance for entrepreneurial studies is considered. Shifting to extant entrepreneurial research, five topical venues are then presented, beginning with a call to better distinguish the meaning and measurement of autonomy (as a core motive from self-determination theory, and as an aspect of well-being from eudaimonic theory) in studies of entrepreneurial experience. The eudaimonic well-being of different types of entrepreneurs is then considered with a primary focus on the distinction between necessity versus opportunity entrepreneurs. These particular types invoke emphasis on sociodemographic factors (e.g., educational and occupational status, income, wealth) that are known from previous research to matter in accounting for differences in reported levels of well-being. The third venue considers how eudaimonic well-being may matter over the course of entrepreneurial experience, underscoring that certain aspects of well-being may account for who chooses an entrepreneurial path while other aspects may serve as protective resources (buffers) vis-à-vis the stresses attendant to managing a self-initiated business. Still other aspects of well-being may be nurtured by the longer-term journey of business venturing. The health of entrepreneurs is then considered as linked to experiences of well-being. New directions for objective health assessments (functional health, biomarkers, neuroscience, gene expression) are considered; all have previously been linked in population-based studies to eudaimonic well-being. Finally, the impact of entrepreneurs on the lives of others (co-workers, employees, families, communities, society) is considered via the contrast between benevolent (virtuous) versus malevolent (vicious) entrepreneurs. Promising empirical questions that follow from these observations are detailed.From a lay perspective, the central importance of bringing eudaimonia to the field of entrepreneurial studies is that the essential core of this type of well-being involves realization of personal talents and potential. Such active pursuit of such personal excellence, in the spirit of Aristotle, is fundamental to entrepreneurship.     

Micro-entrepreneurship and subjective well-being: Evidence from rural Bangladesh

Microcredit has long been hailed as a powerful tool to promote livelihoods and reduce poverty through entrepreneurship. However, its impacts on people's subjective well-being remain underexplored. We present a unified theoretical framework for analyzing the effect of microcredit-enabled entrepreneurship on overall life satisfaction – a key manifestation of subjective well-being. Empirically, we apply an instrumental variable approach to a unique census-like household survey conducted in three villages of Bangladesh in 2013. In spite of having no direct effects, we find that microcredit borrowing has an indirect negative effect on overall life satisfaction, through increased worry. On a positive note, we find that female micro-borrowers experience an increase in satisfaction with financial security and achievement in life. We also provide evidence that micro-borrowers with higher levels of assets experience an increase in satisfaction with financial security.     

An item response theory approach to constructing and evaluating brief and in-depth financial literacy scales

We applied item response theory (IRT) to construct and evaluate new brief and in-depth financial literacy scales. A survey of a UK adult sample (N = 589) included 50 questions to assess knowledge about managing financial resources and competence in using personal finance-related information—including five widely used items, on interest rates, inflation, investment diversification, mortgages and bonds. IRT applied to a scale of these items identified some limitations, overcome via further iterations to construct a new brief scale with sound psychometric properties. IRT was then applied iteratively to our pool, resulting in an in-depth, 20-item scale, also psychometrically sound, covering four broad financial domains: everyday money transactions; the concept of money; borrowing; and saving and investment. Parallel 10-item sub-scales were also evaluated. The validity of the new scales was demonstrated by regression analyses which found that, controlling for demographic variables, financial literacy predicted key indicators of financial well-being.     

Internationalization of financial services in turbulent markets

Two significant features during the post-war period have been an increasing internationalization of economic activities and a growing role for financial services in the world economy. Considerable attention has been devoted to both these features separately, while attention to the internationalization of financial service firms has been more limited. Even more limited have been the efforts to combine this work with studies of the influence of market turbulence on financial service firms. The present special issue is an attempt to provide a remedy to this state of affairs. In this introduction we first provide a background to the topic. We then give a brief summary of the characteristics of financial services as well as a short review of extant literature, before presenting the six papers that make up the issue and providing some conclusions.     

Can prosocial motivation harm entrepreneurs' subjective well-being?

Entrepreneurship research on prosocial motivation has outlined its positive impact on well-being, but still little is known about its power, which may have deleterious personal consequences under certain conditions. In this study, we ask whether prosocial motivation can harm entrepreneurs' subjective well-being when they run a commercial venture. Embedded within a contingency perspective informed by self-determination theory, we build on longitudinal survey data to explain the effect of prosocial motivation on entrepreneurs' overall life satisfaction. Our analysis demonstrates that prosocial motivation has a negative effect on entrepreneurs' life satisfaction due to increased levels of stress. However, our findings show that the negative effect of prosocial motivation dissipates when perceived autonomy at work is high compared to when it is low. Overall, our research raises questions on the role of prosocial motivation for entrepreneurs' subjective well-being and, in particular, discusses its potential “dark side” in the context of commercial entrepreneurship.Executive summaryCan there be a “dark side” in helping others? If so, how can we better understand under what conditions it emerges? Entrepreneurship research conventionally presents prosocial motivation as a positive driver for social venture creation and entrepreneurs' well-being. However, we have little knowledge about the consequences of prosocial motivation when we move outside the social entrepreneurship context. When prosocially motivated entrepreneurs lead a commercial venture, they face the difficult task of balancing the desire to help others with the financial requirements of the business. The challenge of simultaneously accomplishing commercial and prosocial goals can result in a stressful experience that is detrimental to the entrepreneur's well-being. In this study, we ask whether and under what circumstances prosocial motivation can harm entrepreneurs' well-being.Embedded in a contingency perspective informed by self-determination theory, this article expands our knowledge on the effects of prosocial motivation in the context of commercial entrepreneurship. We draw from original longitudinal survey data on 186 entrepreneurs in the United Kingdom to demonstrate that prosocial motivation causes entrepreneurs stress and through that stress has a negative effect on their life satisfaction. We also show that the negative effect of prosocial motivation diminishes when the degree of autonomy entrepreneurs perceive in the pursuit of daily work tasks is high. To explore the uniqueness of the entrepreneurial context, we run a comparative analysis with a sample of 544 employees. This analysis confirms that stress fully mediates the negative relationship between prosocial motivation and subjective well-being, but for employees, this negative effect disappears when their level of intrinsic motivation—the desire to expend effort based on enjoyment of the work itself—is high.Building on our findings, we generate several important contributions. First, we help develop an understanding of the “dark side” of prosocial motivation by demonstrating that under certain circumstances, the desire to help others can be detrimental to entrepreneurs' subjective well-being. Second, we expand knowledge about the link between prosocial motivation and well-being by considering the boundary conditions (perceived autonomy and intrinsic motivation) that influence the dynamics of their relationship. Third, we set the stage for further investigations that aim to clarify the relationship between motivation and perceived autonomy and its effect on personal outcomes across different work domains.The key insight of the study is that prosocial motivation creates a dilemma for entrepreneurs when operating a commercial business such that the desire to help others outside the context of immediate work tasks can harm their personal well-being. We also find that the perception of autonomy is key for commercial entrepreneurs to be able to realize their prosocial motivation without creating stressful situations. Extending our understanding of the conditions that shape the relationship between prosocial motivation and well-being among entrepreneurs would help in developing a more holistic notion of prosocial business venturing, one that includes the role of both commercial and social enterprising activities in contributing to personal and societal well-being.     

Gender differences in financial knowledge,attitudes, and behaviors: Accounting for socioeconomic disparities and psychological traits

A large body of international research finds a persistent gender gap in the financial literacy of women compared to men, but explanations for this gap remain a topic of active debate. In this observational study, we explore the explanatory value of psychological characteristics, in addition to demographic variables and roles in household financial decision making. We begin by documenting the expected gender differences in financial knowledge, attitudes, and behaviors, using a national survey of adult Canadians (n = 21,789) that provides population-level estimates. Next, we contrast these results against a second Canadian survey data set (n = 3,502) where we are able to control for individual differences in psychological traits. Results of OLS regressions suggest that gender is not a significant predictor on three scales of financial capability. Decomposition analysis finds underlying differences in individual characteristics (endowments) explain the majority of the observed gender gap in financial literacy when psychological traits are included in the model.     

Materialistic cues make us miserable: A meta-analysis of the experimental evidence for the effects of materialism on individual and societal well-being

Consumer-oriented societies are awash with materialistic messages that link happiness and success to wealth and consumption. However, despite extensive research evidence that dispositional materialistic orientations are correlated with lower well-being, the effects of materialistic cues on the well-being of individuals and social groups have not been examined. The present research meta-analytically reviews the experimental evidence for the causal effects of materialism on two dimensions of well-being: (a) individual and (b) societal. We included 27 independent studies that met the inclusion criteria of priming materialism and measuring well-being (N = 3,649), containing a total of 62 effect sizes. Multilevel modeling revealed that materialism has an effect on both individual (δ = −0.39) and societal well-being (δ = −0.41), suggesting that materialistic cues cause lower well-being. Moderation effects suggested that materialistic cues might have a higher effect on interpersonal well-being than on self-evaluation indicators. We discuss the limitations of the current evidence, highlight the research gaps and underdeveloped areas, and provide recommendations such as minimum sample size for future experimental work, since the advancement of this area will help us to gain a better understanding of the impact of consumer-oriented societies on the well-being of individuals and social groups.     

Exploring the Relationship between Financial Education and Financial Knowledge and Efficacy: Evidence from the Canadian Financial Capability Survey

Researchers and policymakers in many countries are interested in better understanding the relationship between financial education participation and cognitive outcomes such as financial knowledge and self‐efficacy. We used two waves of the nationally representative Canadian Financial Capability Survey along with propensity score matching (PSM) to compare outcomes between persons who had taken a financial education course to those who had not. After matching and adjusting for demographic and economic factors, financial education participants exhibited significantly higher objective and subjective financial knowledge and financial self‐efficacy scores. Post‐estimation analysis showed that higher overall objective financial knowledge scores were at least partially driven by higher scores of men. Financial education participants had higher subjective knowledge and financial self‐efficacy scores for both genders and across age. Future research into financial education ought to consider cognitive dimensions in addition to behavioral and financial outcomes.     

Does Sustainability Investment Provide Adaptive Resilience to Ethical Investors? Evidence from Spain

Although sustainable and responsible investment (SRI) has quite recently become a hot research topic, scarcely any systematic research has been paid to the performance of this non-conventional approach to investment during the financial crisis that emerged in mid-2008 when the resilience of the financial markets was sorely tested. Such real-world resilience in practice is the subject of the current research which tests whether environmental, social and governance screens provides ethical investors with adaptive resilience in bull and bear market conditions by focussing on the SRI equity index of one of the most active markets in Europe in terms of ethical investment, the FTSE4Good-Ibex in Spain. Multivariate Generalized Autoregressive Conditional Heteroskedasticity (M-GARCH) analysis indicates that ethical investors in the equity market examined with evidence that greater resilience in severe business cycle shocks could be attributable to SRI by companies. Although limited to a single country study, the results have implications for investors seeking resilience in crisis: when individual values and beliefs towards sustainability tie with personal investment strategy, the end result is adaptive financial resilience, social well-being and environmental defence.     

Financial Literacy and Neighborhood Effects

This study uses data from the 2009 and 2012 waves of the National Financial Capability Study to examine the effects of neighborhood characteristics on financial literacy. Controlling for individual characteristics, multivariate regression analysis shows that a zip code's education level has a significant impact on financial literacy. This finding is consistent with social learning as a mechanism of financial knowledge acquisition, with neighborhood education serving as a proxy for the level of financial knowledge of one's social network. Although social effects are not the only possible explanation for this finding, the result is robust even after controlling for a host of other factors such as getting advice from financial professionals, receiving financial education, and living in a zip code with greater employment in the financial industry. This study additionally documents that zip code education effects are present with various savings and credit measures.     

A gender perspective on the use of supplemental healthcare plans

Because employer‐provided health coverage represents the main source of health insurance for Americans and its costs for employees are rising, accurate knowledge about health coverage would seem to be crucial for making sound decisions on choosing the plans that best meet the specific needs of a family. However, previous research suggests that most employees have little understanding of the scope and monetary value, or even the existence of many components of their health benefit package. This paper re‐examines employees’ general financial learning efforts and knowledge level, and how they relate to participation in and importance attached to supplemental healthcare plans. We find that, while self‐directed financial learning and general financial knowledge significantly predicted plan participation and the importance attached to them, demographic factors, such as gender, age and job classification, dominated the supplemental healthcare decisions.     

Investigating the Disconnect between Financial Knowledge and Behavior: The Role of Parental Influence and Psychological Characteristics in Responsible Financial Behaviors among Young Adults

Financial knowledge is an essential component in financial decision making; however, knowledge is insufficient to ensure responsible financial behavior. We investigate the weak association between financial knowledge and behavior by simultaneously testing the roles financial knowledge, parental influence, and individual psychological characteristics (self‐discipline and thoroughness) play in young adults' financial behaviors. Results from 2,712 respondents from the 1997 National Longitudinal Survey of Youth confirm there is a weak association between financial knowledge and behavior. Parental influence and self‐discipline positively associate with responsible financial behavior. We also investigate the moderating role of gender and observe that financial knowledge and parental influence improve women's financial behavior more than men, whereas being thorough has a larger impact among males. These findings suggest that considering social and individual psychological factors in financial education programs could improve program efficiency. The results also highlight the importance of adopting tailored financial education to suit gender differences.     

Data Science,Predictive Analytics,and Big Data: A Revolution That Will Transform Supply Chain Design and Management

We illuminate the myriad of opportunities for research where supply chain management (SCM) intersects with data science, predictive analytics, and big data, collectively referred to as DPB. We show that these terms are not only becoming popular but are also relevant to supply chain research and education. Data science requires both domain knowledge and a broad set of quantitative skills, but there is a dearth of literature on the topic and many questions. We call for research on skills that are needed by SCM data scientists and discuss how such skills and domain knowledge affect the effectiveness of an SCM data scientist. Such knowledge is crucial to develop future supply chain leaders. We propose definitions of data science and predictive analytics as applied to SCM. We examine possible applications of DPB in practice and provide examples of research questions from these applications, as well as examples of research questions employing DPB that stem from management theories. Finally, we propose specific steps interested researchers can take to respond to our call for research on the intersection of SCM and DPB.     

How to encourage social innovations: a resource-based approach

During the last decade, social innovation has emerged as an outstanding topic for scholars, businesses, and public institutions. This growing interest is due to its potential positive effects on well-being and sustainable development. This study analyzes social innovation under the umbrella of the transformative service research framework. Adopting a resource-based perspective, the research attempts to determine whether the deployment in service organizations of two types of factors that support dynamic capabilities, i.e. internal market orientation, and information and communication technology competence, impacts the extent to which these organizations develop different kinds of product, process, marketing, and organizational social innovations. The study also assesses the impact of these innovation activities on the organization's transformational performance in terms of increased access to new targets. Empirical research is based on a two-step survey to a sample of Spanish nonprofits (particularly, a representative sample of foundations), since the nonprofit sector provides services that possess inherent transformational characteristics. Results confirm the expected positive effects of these two factors on social innovation and performance, and provide several guidelines for implementing social innovations in service industries.     

Exploring the Interplay of Cognitive Style and Demographics in Consumers' Financial Knowledge

Despite substantial research and advances in consumers' financial knowledge, many Americans still lack basic financial skills. One overlooked research area is the relationships between consumers' cognitive style and subjective knowledge and objective knowledge, and how these relationships vary by demographics. Based on a nationwide study (n = 817), results indicate that consumers' perception of their subjective financial knowledge varies by cognitive style, with those consumers having an intuitive cognitive style, having a higher perception of their subjective financial knowledge than those who are more analytical. More nuanced results suggest that subjective knowledge is related to the interplay of cognitive style with demographics, whereas objective knowledge is not dependent on this interplay. These and other results illustrate that understanding nuances of financial knowledge is still of pressing importance to ensure consumer well‐being.     

Well-being Marketing: An Ethical Business Philosophy for Consumer Goods Firms

In this article we build on the program of research in well-being marketing by further conceptualizing and refining the conceptual domain of the concept of consumer well-being (CWB). We then argue that well-being marketing is a business philosophy grounded in business ethics. We show how this philosophy is an ethical extension of relationship marketing (stakeholder theory in business ethics) and is superior to transactional marketing (a business philosophy grounded in the principles of consumer sovereignty). Additionally, we argue that well-being marketing is based on duty ethics concepts, specifically the duty of beneficence and non-maleficence. Subsequently, we show how the well-being concept guides marketing decisions for consumer goods firms.