Financial Sophistication and Consumer Spending

• 成果类型: Article
• 署名作者: Jorring, Adam Tejs
• 署名单位: University of Massachusetts System; University of Massachusetts Amherst
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13393
• 发表日期: 2024
• 页码: 3773-3820
• 关键词: household consumption; predictable changes; permanent income; monetary-policy; debt response; life-cycle; literacy; liquidity; SALIENCE; shocks

摘要

Using detailed account-level data, this paper explores how financial sophistication affects consumers' spending responses to changes in income. I document that, controlling for liquidity, financially unsophisticated consumers display significant spending responses to predictable decreases in their disposable income. Furthermore, they have lower savings rates, fewer liquid savings, and higher debt-to-income ratios, leaving them more exposed to income shocks. Robustness tests, supported by anecdotal survey evidence, indicate that these results are driven by some consumers' lack of financial sophistication and their consequent failure to understand their financial contracts, rather than by random idiosyncratic shocks, rational liquidity management, or optimal inattention.