Testing the Relationship Between Confidence and Effort: A Behavioral Finance Perspective on the Problem of Financial Literacy

• Main Authors: Jacob, Louie Bernard A., Rabago, Miguel Angelo S., Tan, Hans Erickson A., Dacuycuy, Lawrence B., Largoza, Gerardo L., Dabbay, Maria Fe Carmen L.
• Format: text
• Published: Animo Repository 2021
• Subjects: Financial Literacy; Finance; buying power; Behavioral Economics; Growth and Development
• Online Access: https://animorepository.dlsu.edu.ph/res_aki/9; https://animorepository.dlsu.edu.ph/cgi/viewcontent.cgi?article=1006&context=res_aki
• Institution: De La Salle University

This experimental study tested the relationship between confidence and effort with the ultimate objective of discovering how these factors may influence financial literacy. This was done through a modified version of a slider test and ball allocation task. The population consisted of 85 random participants who were primarily approached through social media. A simple OLS regression, along with robustness checks, namely the Tobit model and instrumental variable (IV) regression model using Tobit estimators, were utilized to confirm the causal relationship between confidence and effort.