According to the same Allianz 2020 study, 30% of Europeans are able to answer basic financial questions. For example fundamental concepts such as inflation, diversification and interest. This lack of financial literacy affects women even more, with a 16% gap with men on this subject.
This is in line with a previous OECD study in 2012. It found that a significant proportion of individuals did not understand basic concepts, such as diversification.
However, Europeans are interested in financial matters and want to learn about them. According to a study by the Banque de France in 2020, 52% of French people say they are interested in financial matters and current events.
How can we explain the paradox of a low level of financial literacy, despite the interest of individuals in the subject?
A first hypothesis could be the overconfidence bias of individuals. They would overestimate their financial knowledge, even though they have little. This theory is supported by the 2012 OECD study, which shows that respondents overestimate their rate of correct answers. Indeed, they prefer to answer wrong rather than to choose the “I don’t know” option.
This phenomenon could also be due to the lack of financial training tools that are adapted to the expectations of individuals, especially young people.
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