Skip repeated menu and go directly to contents

San Diego State University

Fowler College of
Business Administration

Intellectual Contribution

Title
Financial Literacy and Neighborhood Effects
Author(s)
Lachance, M.
Type of Research
Peer-Reviewed Journal Articles
Date Published
2014, Before July
Contribution Type
Discipline-based scholarship (basic research)
Contribution Category
B
Points
9
Publication Title
Journal of Consumer Affairs (forthcoming)
Volume(s)
48
Edition
2
Page Number(s)
251-273
Abstract
This study uses data from the 2009 and 2012 waves of the National Financial Capability Study to examine the effects of neighborhood characteristics on financial literacy. Controlling for individual characteristics, multivariate regression analysis shows that a zip code’s education level has a significant impact on financial literacy. This finding is consistent with social learning as a mechanism of financial knowledge acquisition, with neighborhood education serving as a proxy for the level of financial knowledge of one’s social network. Although social effects are not the only possible explanation for this finding, the result is robust even after controlling for a host of other factors such as getting advice from financial professionals, receiving financial education, and living in a zip code with greater employment in the financial industry. This study additionally documents that zip code education effects are present with various savings and credit measures.