Self-awareness for financial decision-making abilities in healthy adults

OBJECTIVE: Decades of research have established how to measure metacognition (i.e., awareness of one’s cognitive abilities), whereas relatively little is known about how to assess the integrity of financial awareness (FA; awareness of one’s financial abilities), a related construct with practical implications for vulnerable older adults. The current study’s goal was to apply established metacognitive frameworks to identify an objective measure of FA. METHODS: Metacognitive ratings were integrated into two financial decision making (FDM) assessments in order to derive two types of FA metrics: absolute accuracy (calibration) and relative accuracy (resolution) in each FDM task. Associations between each FA metric, demographic variables, FDM performances, and metamemory were examined. DESIGN & SETTING: Cross-sectional, community-based, prospective study. PARTICIPANTS: 93 individuals with mean age = 59 years (SD = 15.12); mean education = 15.70 (SD = 2.39); 60% females. MEASURES: FA was calculated using the Financial Competency Assessment Inventory (FCAI) and Decision Making Competence Assessment Tool, Finance Module (DMC-F), and memory awareness was calculated using an objective metamemory test. RESULTS: None of the FA metrics was associated with age, education or gender. FCAI calibration was inversely associated with FDM, and positively correlated with DMC-F calibration and metamemory calibration. None of the FA metrics for DMC-F was associated with metamemory. CONCLUSIONS: Mirroring findings from metamemory studies, overconfidence in FDM was associated with lower FDM accuracy in healthy adults. Moreover, calibration scores on the FCAI and metamemory were related, suggesting that FA taps into metacognitive abilities. Our findings provide preliminary evidence for how to measure FA in both clinical and research contexts.