financial literacy, quantitative literacy, numeracy


The lack of capability of making financial decisions has been recently described for the adult United States population. A concerted effort to increase awareness of this crisis, to improve education in quantitative and financial literacy, and to simplify financial decision-making processes is critical to the solution. This paper describes a study that was undertaken to explore the relationship between quantitative literacy and financial literacy for entering college freshmen. In summer 2010, incoming freshmen to Michigan State University were assessed. Well-tested financial literacy items and validated quantitative literacy assessment instruments were administered to 531 subjects. Logistic regression models were used to assess the relationship between level of financial literacy and independent variables including quantitative literacy score, ACT mathematics score, and demographic variables including gender. The study establishes a strong positive association between quantitative literacy and financial literacy on top of the effects of the other independent variables. Adding one percent to the performance on a quantitative literacy assessment changes the odds for being at the highest level of financial literacy by a factor estimated to be 1.05. Gender is found to have a large, statistically significant effect as well with being female changing the odds by a factor estimated to be 0.49.



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