Financial Literacy and Generation Y: Relationships Between Instruction Level and Financial Choices

The heuristics used by investors in their process of decision-making tend to find short cuts and simplified roads to complicated answers, often unintentionally forgetting to be rational in contrast with market efficiency assumptions. We conducted a survey on about 250 young people (18–27 years old) concerning their financial literacy and economic choices, given an education level which is predominantly very high (73% enrolled in a bachelor degree, 80% took part to at least some basic finance or economics courses). More precisely, the survey was designed to study the influence of financial-economic literacy on the flaws occurring in financial decisions of young people (the so called generation Y): biases, overconfidence, framing. The results of the survey give an insight into the behaviour of a new and educated generation in typical economic decision frameworks, which could be a useful tool for stakeholders. In fact, being aware of the psychological component of the financial decision is a key factor to better understand and manage risk.