Financial knowledge, attitude and behavior: evidence from the Austrian Survey of Financial Literacy

This paper provides an in-depth analysis of the links between financial knowledge, attitude and behavior, based on the Austrian contribution to the OECD/INFE survey on financial literacy. Our analysis gives evidence of causal effects of financial knowledge on financial behavior, using a new instrument based on respondents’ newspaper reading habits. We confirm that the selection bias is likely negative, i.e. we would underestimate the causal effect of knowledge on behavior in a classical regression setting. Furthermore, we provide mediation analyses, showing that about 13% of the causal effect of knowledge on behavior is mediated through financial attitude.