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Assessing numerical reasoning provides insight into financial literacy
Preeti Sunderaraman1, Megan Barker1, Silvia Chapman1
1Columbia University Medical Center, New York, NY, USA.
Applied Neuropsychology. Adult
|August 16, 2020
Summary
Numeracy skills, including numerical reasoning, mental arithmetic, and math achievement, are crucial for financial literacy. Numerical reasoning showed the strongest link to financial literacy in adults.
Area of Science:
- Cognitive Psychology
- Behavioral Economics
- Adult Education
Background:
- Financial literacy significantly impacts financial well-being and decision-making.
- Existing research highlights a strong relationship between financial literacy and numeracy skills.
- The specific contributions of distinct numeracy aspects to financial literacy remain underexplored.
Purpose of the Study:
- To investigate the differential relevance of various numeracy components for financial literacy.
- To examine the predictive power of numerical reasoning, mental arithmetic, and math achievement on financial literacy.
- To provide empirical evidence for clinicians assessing financial skills.
Main Methods:
- A sample of 88 cognitively healthy adults (mean age=50) participated.
- Financial literacy was assessed using the Big Three scale.
- Numeracy was measured via the Wechsler Adult Intelligence Scale-III (Arithmetic), Wide Range Achievement Test-IV (Math Computation), and Weller's Abbreviated Numeracy Scale (WANS).
Main Results:
- Regression analyses indicated that all numeracy measures significantly predicted financial literacy.
- Numerical reasoning demonstrated the strongest association with financial literacy.
- Mental arithmetic and math achievement also showed significant, albeit weaker, positive correlations with financial literacy.
Conclusions:
- Numeracy skills are essential for developing and maintaining financial literacy.
- Numerical reasoning is a key component of numeracy that most strongly influences financial literacy.
- These findings offer valuable insights for targeted interventions and assessments in financial education and clinical practice.
Keywords:
Financial literacymath achievementmathematical and numerical skillsmental mathnumerical reasoningMore Related Videos
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