Factors affecting knowledge about the adult guardianship and civil trust systems: evidence from Japan

Financial Literacy and Alcohol Drinking Behavior: Evidence from Japan

Alcohol consumption is an important public health issue in Japan due to its association with numerous side effects. Recent studies find that financial literacy helps people abstain from risky health behaviors such as smoking, lack of exercise, and gambling. This study investigates how financial literacy, as a rational decision-making instrument, is associated with alcohol consumption behavior in Japan. Using data from the Preference Parameter Study (PPS) of Osaka University, we categorize respondents into daily drinkers and non-daily drinkers. We find that financial literacy is not significantly associated with alcohol consumption among Japanese people. We argue that the prevailing social belief that alcohol consumption is not entirely negative from the health perspective and can be beneficial for socialization to some extent overrides people’s rationality and plays a significant role in alcohol consumption decisions. However, our study provides evidence that respondents who are males, middle-aged, have children, have higher household income, have smoking habits, and place more importance on the future are more likely to be daily drinkers. We argue that the availability and easy access to alcohol drinking opportunities likely make people irrational and tempts them to drink frequently. Thus, authorities might consider revising current policies regarding alcohol availability and accessibility to limit alcohol consumption.

Who Is Next? A Study on Victims of Financial Fraud in Japan

Japan has seen an increase in the incidents of financial frauds over the last couple of decades. Although authorities are aware of the problem, an effective solution eludes them as fraudsters use innovative swindling methods and continually change the target group. Using a nationwide survey conducted by Hiroshima University, Japan, in 2020, this study investigated the socioeconomic and psychological profiles of victims of trending and special financial fraud such as fictitious billing fraud, loan guarantee fraud, and refund fraud. It was found that financial fraud victims' profiles are dissimilar at the aggregate and specific levels. At the specific level, victim profiles were diverse, that is, in fictitious billing fraud, loan guarantee fraud, and refund fraud cases. Males, married, and financially less satisfied people were more often victims of fictitious billing fraud; less anxious people were more likely victims of loan guarantee fraud; and older, asset-holding, and less-income-generating respondents were found to be victims of refund fraud. Our results also show some commonalities in the victims' profiles. For example, financially less-literate people were found to be more likely victims of fictitious billing fraud and loan guarantee fraud. Finally, respondents who lived with their family, those who did not have careful buying habits, and those who suffer from bouts of loneliness were found to be common victims of all types of special financial fraud. The results of our study suggest that a one-size-fits-all policy cannot effectively combat financial fraud.

Financial Literacy and Gambling Behavior: Evidence from Japan

According to a survey by Japan's Ministry of Health, Labor, and Welfare in 2017, 3.6% of Japanese adults-equivalent to about 3.2 million people-have suffered from problem gambling at some point in their lifetime. This study examines the relationship between financial literacy, financial education, and gambling behavior (measured as gambling frequency) among the Japanese population. We hypothesize that financially literate and financially educated people who use their knowledge to make sound financial decisions are less likely to gamble. The data used in this study are from a nationwide survey in Japan from the Preference Parameters Study of Osaka University in 2010 (n = 3687). To control for endogeneity bias between financial literacy and gambling behavior, we use the education of respondents' fathers as an instrumental variable. The results from the probit-instrumental variable model show that financial literacy has a significantly negative relationship with gambling frequency, while financial education has no significant relationship with gambling frequency. Our findings suggest that problem gambling may be mitigated by promoting financial literacy, but no such conclusion can be drawn for financial education.

Financial Literacy and Gambling Behavior in the United States

Problem gambling is becoming a growing concern in the United States because of the proliferation of, and state support for, gambling opportunities. The economic cost along with the physical and mental health problems associated with problem gambling make it necessary to study how problem gambling can be reduced. Our study examines whether financial literacy could be a means to reducing gambling frequency in the United States. We use data from the Preference Parameter Study of Osaka University, Japan, and apply instrumental variable probit regression models. The results show that, generally, financial literacy does not have a relationship with gambling frequency, but the relationship is significant in the states where electronic gambling machines (EGMs) are available. The results imply that gamblers are irrational and fail to assess the risks of gambling as well as the probabilities that maximize expected payoffs. It appears that gamblers' psychological gain from gambling outweighs the negative expected utility when there is easy access to gambling. Thus, rationality with regard to gambling decisions does not work unless the easy access to EGMs is controlled. Our results further show that males, older people, people with higher household income, and people who have easy access to gambling are likely to be frequent gamblers.

Financial Literacy and Exercise Behavior: Evidence from Japan

Lack of exercise, which increases the risk of many serious physical and mental illness, has been a common health issue in Japan. Recent studies confirm that financial literacy discourages irrational behavior like gambling and smoking. We therefore investigate how financial literacy, as a rational decision-making instrument, relates to peoples’ exercise behavior in Japan. We hypothesize that financial literacy encourages people to exercise regularly. Using Osaka University’s Preference Parameters Study (PPS) for 2010, we categorized respondents into two groups: those who exercise regularly or at least once a week and those who do not. Our probit estimation results show that financial literacy is positively related with exercise behavior, meaning that financially literate people are more likely to exercise regularly. As the COVID-19 health pandemic seems to exacerbate peoples’ physical inactivity, the results of our study show an alternative approach to encourage exercise. We therefore recommend that governments implement a financial literacy improvement policy to alleviate the lack of exercise.

The Economic Burden of Dementia: Evidence from a Survey of Households of People with Dementia and Their Caregivers

Although a cognitive impairment such as dementia causes serious economic problems among older people, its impact on economic activities is unclear. This study investigated the actual conditions of economic activities and the current status of the financial support systems among people with dementia and caregivers. One hundred and five dyads participated in the survey. Each dyad consisted of an older person with Alzheimer’s disease and their caregiver. The Mini-Mental State Examination (MMSE) and Functional Assessment Staging (FAST) were used to evaluate the cognitive functions of people with dementia. The caregivers were asked questions concerning the financial status of the household and their utilization of the financial support systems available to people with dementia. Average monthly care costs significantly increased according to the severity of dementia, while household income and spending incurred no significant changes. People with dementia experienced financial problems (including a large amount of erroneously purchased, unnecessary shopping), even though their assets were informally managed by their caregivers. Financial support systems such as adult guardianship and civil trust systems were rarely known and used. We proposed the propagation of the adult guardianship and civil trust systems and the development of contract guidelines for elderly customers including people with dementia.

Do Financial Literacy and Financial Education Influence Smoking Behavior in the United States?

Smoking is still a serious economic, health, and social problem despite various efforts to curb its prevalence. We examined the influence of financial literacy and financial education on the smoking behavior in the United States in terms of the use of rational decision-making abilities to reduce irrational behavior. We hypothesized that financial literacy and financial education, as proxies for rational decision making, would reduce the likelihood of smoking. We used data from the Preference Parameters Study (PPS) of Osaka University conducted in the United States in 2010 and applied probit regression models to test our hypothesis on a sample of 3831 individuals. We found that financially literate people are less likely to be smokers, though we found no clear role of financial education in reducing the likelihood of smoking. Further, respondents' gender, age, unemployment status, and risky health behaviors such as drinking and gambling, have a significantly positive association with smoking, while marital status, university degree, family size, household income, household assets, physical exercise, and level of happiness have a significantly negative association. Our findings suggest that financial literacy, as an instrument encouraging rational decision making, could be a tool to help reduce smoking in the United States.

Financial Literacy, Financial Education, and Smoking Behavior: Evidence From Japan

In this study, we examine the relationship between financial literacy, financial education, and smoking behavior among the Japanese population. We hypothesize that financially literate and financially educated people, who have the ability to make more rational decisions, are less likely to smoke. Using the Preference Parameters Study of Osaka University, conducted in 2010 (N = 3,706), the probit regression results show that both financial literacy (with an emphasis on knowledge of investments) and financial education (with an emphasis on savings behavior) have a significant negative impact on smoking behavior. In addition, gender, age, education, marital status, household income and assets, risky behaviors, a myopic view of the future, risk preference, and level of happiness also significantly predict the likelihood of a person being a current smoker. This study provides empirical evidence that enhancing the rational decision-making ability of individuals through financial literacy and financial education may curtail smoking behavior.

Is Financial Literacy Associated with Investment in Financial Markets in the United States?

Lack of investment in financial markets is one of the enduring puzzles in empirical finance. Although recent studies ascribe the lack of investment in stocks to financial literacy, the association between financial literacy and investment in financial markets remains inconclusive. We examine whether financial literacy is associated with investment in financial markets in the United States. We use investment in stocks, futures/options, investment trusts, corporate bonds, foreign currency deposits, and government bonds of foreign currency as a proxy for investment in financial markets. Using data from the Preference Parameter Study, a nationwide panel survey conducted by Osaka University of Japan, we provide evidence that financial literacy has a significantly positive association with investment in financial markets even after controlling for demographic, socioeconomic, and psychological factors. We check the robustness of our results by using an alternative proxy for investment in financial markets. Our study has far-reaching policy implications and we conclude by suggesting the introduction of financial literacy programs into the academic curriculum. Improving financial literacy could positively impact the mobilization of household funds and contribute to capital formation.

Government’s Stimulus Program to Boost Consumer Spending: A Case of Discount Shopping Coupon Scheme in Japan

The unprecedented outbreak of COVID-19 has triggered a worldwide economic recession. Consequently, governments are pursuing different stimulus packages to alleviate the resulting pressures. This study examines one such program intended to enhance consumer spending during an economic downturn. In 2015, the Japanese government implemented a discount shopping coupon scheme, offering a 20% discount on purchases. This study aims to identify the groups of consumers who responded most to the discount shopping coupon scheme. To this end, we examine the demographic and socio-economic factors associated with the purchasers of discount shopping coupons in Hiroshima Prefecture, Japan. Using IV probit models, we show that middle-aged people, homemakers, household balance of financial assets, and short-term attitude are positively associated with the purchase of the coupons. Financial literacy reflects a negative association with the purchase of the coupons for respondents over the age of 40, whereas household income shows a positive association for middle-aged respondents. Our results imply that programs designed to improve consumer consumption may not be effective as blanket solutions that are applied to everyone indiscriminately, but rather seem to show efficiency when tailored to different people according to their demographic and/or socio-economic characteristics.

Financial Literacy in Japan: New Evidence Using Financial Knowledge, Behavior, and Attitude

Success in the current complex and sophisticated financial marketplaces depends on the ability of people to make sustainable financial decisions to improve their future well-being, for which financial literacy is a pathway. This study examines the relationship between the demographic and socio-economic factors and financial literacy in Japan by segregating financial literacy into financial knowledge, attitude, and behavior, and providing a deeper understanding of the relationships. The methodology included using data from the Financial Literacy Survey 2016 by the Central Council for Financial Services Information of Japan. We used a linear regression model to explain how demographic and socio-economic factors relate to financial knowledge, attitude, and behavior. Results show that education, the balance of financial assets, and the use of financial information are positively related, while the experience of financial trouble is negatively related to financial knowledge, attitude, and behavior. We show that males are more financially knowledgeable than females, but females are more positive than males with regard to financial behavior and financial attitude. Age is positively related to financial knowledge but negatively related to financial attitude, thus suggesting that middle-aged people in Japan are more financially knowledgeable, but younger and older people are more positive with regard to financial behavior and attitude. The findings have implications for policymakers.