Psychology: Techniques and Application

Psychology: Techniques and Application ›› 2018, Vol. 6 ›› Issue (8): 465-471.doi: 10.16842/j.cnki.issn2095-5588.2018.08.003

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Financial Capacity Based on the Rational Decision-Making View: Concept, Construct and Measurement

  

  1. (1 School of Sociology and Psychology, Central University of Finance and Economics, Beijing 100081, China; ) ( 2 Business School, Beijing Normal University, Beijing 100875, China)
  • Online:2018-08-01 Published:2018-08-21

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Abstract: Financial literacy is an important topic that attracted wide attention recently across different countries. However, researchers in this field made a mistake of argument circular in defining and assessing this concept, by confusing one of its key components, financial capacity with financial behavior. To this end, we reviewed existing literature and proposed a new framework based on the rising behavioral economics. This framework deemed financial capacity as a multi-component structure, with rational decision making as its core capacity, and financial reading, numeracy, risk management and self-control as its peripheral capacities. We then discussed the question of assessing each of the five financial capacities.

Key words: financial literacy, financial capacity, decision making, behavioral economics

CLC Number: 

  • B84-05
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