The Effect of Problem-Solving Skills and Gender on Financial Behaviors

Abstract

There is evidence of significant financial illiteracy amongst Americans. Given the nature of modern financial systems, financial literacy is becoming increasingly more important, and personal finance classes are becoming more commonplace throughout the U.S. This paper analyzes how problem-solving skills and gender impact financial behaviors, and part of its intent is to influence developing financial education curricula. For the analysis, I collected data from the Arizona Pathways to Life Success for University Students (APLUS) study and implemented a linear model using interaction terms estimated by OLS. I assessed how problem-solving skills and gender impact financial behaviors including debt, results on a financial literacy quiz, budgeting, and investing. I concluded that problem-solving skills appear to have a higher impact on debt for men than women, negative orientation more greatly impacts women’s financial behaviors than men’s, and the impulsive-avoidant problem-solving style is the most impactful on financial behaviors overall.