New insights into improving financial well-being

Research Dialogue
Insights Report

The concept of financial wellbeing is subject to different definitions and interpretations, and there can be significant differences between individuals’ perceptions of their financial wellbeing and objective quantifiable measures.


An individual’s state of financial wellbeing arises from a compilation of factors, including their self-perception of having the autonomy to make sound decisions, behaviors they undertake, objective values of their net worth, and their self-assessment of current positions and future expectations. This study systematically identifies the drivers of financial wellbeing, tests their relationship to composite measures, and outlines the behaviors, perceptions, and quantifiable outcomes that contribute to it.

Key Insights

  • An individual’s discount rate, financial efficacy, household income, and good physical health appear to drive financial well-being.
  • The personality trait of conscientiousness is significantly associated with positive financial behaviors.
  • Financial literacy appears to be necessary but not sufficient to enhance financial well-being.

Drivers and demographic variables that consistently contribute to financial wellbeing include individual discount rates, financial efficacy, financial literacy and income.


The researchers use data from the Understanding America Study, a nationally representative Internet panel of households, conducted through the University of Southern California’s Center for Economic and Social Research. The study includes roughly 12,000 respondents in 5,000 households, and the sample used for this report consists of 2,887 people ages 44-76 who participated in the study in April and May 2020.

Table: Predictive margins of financial efficacy with 95% CIS


Jennifer Coats

Colorado State University

Vickie Bajtelsmit

Colorado State University

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