The Expected Returns of Financial Literacy (EP.217)

<p>What impact does financial literacy have on decision-making and financial outcomes? How is financial literacy tested? In this episode, we help listeners understand why financial literacy is vital in terms of financial well-being. Learn the definition of financial literacy, how financial literacy relates to economic outcomes, the differences between people who are financially literate and those that are not, and the contribution of financial knowledge to human capital. We discuss the topic through the perspective of several papers that will challenge how you think about financial literacy and the questions to ask yourself to test your financial understanding. Then, we talk about this week's book review regarding the effects of technology on communication and the various distractions associated with a traditional work environment. We also go through the various reviews received about the show and what we have planned for the Rational Reminder community.</p> <p> </p> <p><strong>Key Points From This Episode:</strong></p> <p> </p> <ul> <li>Breakdown of changes made to the format of current and future episodes. <strong>[0:01:49]</strong></li> <li>Introduction to today’s topic: expected returns of financial literacy. <strong>[0:07:34]</strong></li> <li>Learn the definition of financial literacy. <strong>[0:09:36]</strong></li> <li>The predictive power of financial literacy concerning financial outcomes. <strong>[0:10:27]</strong></li> <li>What financially literate people are better at and how it increases human capital. <strong>[0:11:34]</strong></li> <li>The cost of financial ignorance to the individual. <strong>[0:13:06]</strong></li> <li>Overview of an interesting paper concerning active investing. <strong>[0:14:43]</strong></li> <li>A dangerous observation within the financial literacy research <strong>[0:16:34]</strong></li> <li>Find out how financial literacy is measured. <strong>[0:20:10]</strong></li> <li>Whether it is safer to put your money into one business or to invest. <strong>[0:21:23]</strong></li> <li