We investigate the impact of a financial literacy intervention on the higher order risk preferences of prudence and temperance in an online experiment. We further examine associations with economic decisions, in particular precautionary saving and portfolio risk.


This paper is motivated by the fact that a vast majority of individuals is not able to provide the correct answers to simple economic questions pertinent to day-to-day financial decision making (Klapper and Lusardi, 2020). A rich body of literature finds that individuals fail to grasp the relationship between risk and return, risk diversification, understanding of stocks and bonds. It is only recently that literature in finance has begun to investigate how financial literacy affects risk preferences (Aschenwald et al., 2024; Razen et al., 2021; Sutter et al., 2023). Some studies provide direct evidence that a majority of individuals exhibit prudent (Deck and Schlesinger, 2010, 2014; Ebert and Wiesen, 2011, 2014; Noussair et al., 2014; Breaban et al., 2016; Baillon et al., 2018; Fairley and Sanfey, 2020; Haering et al., 2020; Heinrich and Shachat, 2020) and temperant behavior (Deck and Schlesinger, 2014; Ebert and Wiesen, 2014; Noussair et al., 2014; Haering et al., 2020), but sometimes intemperance (Deck and Schlesinger, 2010; Baillon et al., 2018). In order to experimentally elicit higher order risk preferences, we elicit non-parametric intensity measures of higher order risk preferences introduced by Schneider et al. (2024).


We connect these strands in the literature and study the effect of a financial literacy intervention on higher order risk preferences and risk aversion by conducting a controlled online experiment. The research question we address is whether a financial literacy intervention affects individuals' higher order risk preferences and field behavior.