In 2008, two Ponzi schemes, DMG and DRFE, were shut down by the Colombian government. Using matched administrative data for a sample of almost a quarter of a million of their investors, we analyze the household risk factors associated with three main outcomes: the probability of investing, the likelihood of making a profit, and the size of financial gains or losses relative to deposits. We find that education, age, and household wealth are positively associated with these outcomes, though effects are often non-linear and vary across margins. Geographical location is also important: individuals residing in the regions of origin of the schemes were substantially more likely to invest, profit, and achieve higher returns, suggesting a role for timing and access in driving outcomes. While higher education, which has been shown to be highly correlated with measures of financial literacy, improves outcomes, even the most educated groups suffer substantial losses on average. Our findings contribute to the literature on household finance, financial education, and financial literacy, and have implications for the design and targeting of financial education programs, particularly in settings with weak regulatory oversight and limited financial literacy.

Online sports gambling expanded rapidly in the United States since 2018. This article uses a nationally representative sample survey in early 2025 to measure who is gambling, how much, and online sports gambling’s association with financial wellbeing and decision-making. Gambling in a casino was still more common than online sports gambling in early 2025, but the populations appear distinct, suggesting that sports gambling rapidly expanded the gambling population. Three-quarters of online sports gamblers were male. They were typically younger and had higher incomes than either non-gamblers or casino gamblers. Sports gambling was not statistically associated with lower financial wellbeing or a higher likelihood of difficulty paying bills but was associated with higher rates of revolving credit card debt and did cause some financial distress. One-third of sports gamblers engaged in high-intensity gambling which could indicate problems. Sports gamblers rated their ability to make complex financial decisions higher than non-gamblers, yet they were more impatient and more likely to be overconfident.

Deciding whether to use an annuity to draw down accumulated retirement wealth is among the most complex financial decisions individuals face. It requires reasoning about longevity risk, stochastic income streams, and largely irreversible trade-offs, often at older ages and with limited opportunities to learn from experience. This paper reviews theoretical, empirical, and experimental research to examine how financial literacy and longevity literacy shape annuitization decisions. While some extensions of the standard lifecycle model can rationalize low annuity demand, their explanatory power depends on individuals’ ability to optimize over a set of complex risks and trade-offs. Evidence shows that, although financial and longevity literacy are only weakly and inconsistently related to annuity take-up, they are strongly associated with retirement planning, the coherence of annuity valuations, and sensitivity to framing and choice architecture. These patterns suggest that literacy should be understood not as a direct determinant of annuity demand, but as a constraint on the extent to which observed annuitization behavior can be interpreted as revealing true preferences.

A growing literature examines financial well-being (FWB) and the factors that influence it. However, studies employ a wide range of FWB measures. We examine and organize the literature by type of FWB measure, including composite FWB scales, objective financial outcomes, perceptions of FWB, and financial behaviors. By integrating evidence from studies using diverse measures of FWB, we identify key themes regarding individual-level factors consistently associated with this important concept. One of the main themes emerging from this literature is that differences in definition of FWB or choice of dependent variable do not substantially change the conclusions that are made about contributing factors. Across a wide range of measures, FWB is significantly related to individual competence, confidence, psychological characteristics, and preferences. However, the effects of various factors differ depending on whether measures of FWB reflect current circumstances or are future-oriented.

We analyze financial literacy in Switzerland and its relationship with various economic outcomes using novel survey data collected in 2023. We show that the overall financial literacy levels are high in Switzerland in an international comparison, with over 50 percent of the respondents correctly answering three financial literacy questions about interest, inflation, and risk diversification. However, we also find important heterogeneity within the population, e.g., women, the less educated, and Italian-speaking respondents exhibit, on average, lower financial literacy. In addition, we also present clear evidence that differences in financial literacy matter for the financial behavior and well-being. Respondents with higher financial literacy scores are better able to manage their expenses, to save money, and to deal with economic shocks.

How does experiencing direct investment loss affect individuals’ trust in the financial system? Exploiting recent UK corporate financial failures that generated press headlines, government debates, and institutional criticisms, we design and analyse a survey involving investors in these failures. We find that direct exposure to investment losses significantly reduces trust in financial markets, regulators, big audit firms, and the likelihood of future risky asset market participation. Moreover, trust loss is not fully reversible even with possible compensation. Individual characteristics are not the key drivers of trust losses/gains either. We also survey master’s students exposed to reading about these failures. Information about losses of others reduces trust but less than direct experience. Overall, our results emphasize the role of personal experience in determining trust and future investment decisions.

The finance-inequality nexus is central to understanding cross-country income disparities, yet the evidence on whether financial development raises or lowers inequality remains mixed. This paper asks whether economic literacy, a population’s capacity to understand and use financial services, conditions that relationship. Using a panel of forty-eight countries over the 1995–2008 period and System GMM estimation that addresses the endogeneity of financial development, we find that financial development is positively associated with income inequality, but that this effect is significantly mitigated where economic literacy is higher. At low levels of economic literacy, financial development increases inequality; as literacy rises, the effect weakens, and at sufficiently high levels, it may become negligible. The moderating effect is negative and significant under two independently constructed measures of economic literacy: a survey-based index and an objective metric. It therefore does not depend on how literacy is measured. The result also holds under an alternative measure of financial development, a reduced instrument set, and controls for institutional quality. The findings identify economic literacy as a complement to financial development through which the distributional gains from finance can be more widely shared.

The rapid expansion of cryptocurrencies has increased interest in understanding the factors that drive participation in these emerging financial markets. Among the determinants examined in the literature, the role of financial literacy remains controversial, with previous studies reporting positive, negative, and insignificant relationships. This paper investigates the association between financial literacy and cryptocurrency adoption using data from the OECD/INFE International Survey on Adult Financial Literacy 2023. Financial literacy is measured through an index based on three core concepts: inflation, compound interest, and risk diversification. The models control for demographic and socioeconomic characteristics, previous investment experience, attitudes toward financial risk, trust in the financial system, and country fixed effects. The results consistently show that higher levels of financial literacy are positively associated with cryptocurrency ownership. Previous investment experience, male gender, higher income, and younger age also significantly increase the likelihood of cryptocurrency participation, whereas tertiary education has no independent effect once financial literacy is considered. The findings suggest that financial literacy facilitates participation in financial innovation by reducing informational barriers rather than encouraging speculative behavior. The study contributes new cross-country evidence to the literature and highlights the importance of financial education in an increasingly digital financial environment.