FINANCIAL BEHAVIOURAL INTENTIONS IN CORRELATION WITH CONTEXTUAL CUES AND FINANCIAL LITERACY – A HUNGARIAN EMPIRICAL STUDY

Efforts to improve financial literacy often deal with enhancing financial knowledge, but this approach's long-term effectiveness is limited (Fernandes et al., 2014). Our study examined how financial behaviour can be influenced by nudge interventions and how their efficacy depends on financial literacy levels. We used three interventions: defaults, priming, and pre-commitment strategies (Thaler and Sunstein, 2008). We expected that people with lower levels of finan-cial literacy would be more impacted by contextual cues. While a lot of studies have been conducted focusing on various aspects of financial literacy, to our knowledge, there have been no studies examining the effectiveness of nudge interventions with regard to the level of financial literacy. We surveyed 158 Hungarian adults using a questionnaire about financial literacy (OECD / INFE Toolkit for Measuring Financial Literacy and Financial Inclusion, 2018). Sub-jects were divided into groups with different interventions. In case of defaults, participants were shown a hypothetical investment portfolio overweight in ei-ther stocks or bonds and asked whether they would invest new money in stocks or bonds, expecting them to consider the overweight asset class. For priming, one group saw positive financial market images, while another saw negative images. Based on the priming effect of visual cues we expected those exposed to positive images to prefer investing in risky assets (stocks) and those exposed to negative images to prefer safer investments. With pre-commitment, participants chose between saving for their children's education or investing in risky assets. Group 1 made no commitment to their partners, while Group 2 did. We expected those who pre-committed to be more likely to save money. Results showed de-faults had the most impact on decisions. In the case of priming, more people chose the expected option but, similar to pre-commitment strategies, did not prove to be statistically significant. Surprisingly, people with high financial literacy were as influenced by nudges as those with lower literacy. In conclu-sion, defaults effectively influence financial decisions, and people with high financial literacy are equally susceptible to contextual cues. Our study's limita-tion was the generally high financial literacy of the participants, suggesting future studies should include those with lower literacy for more representative results.