Human Capital Investment & Financial Planning Decision-Making

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This dissertation examines the associations between an individual’s domain-specific human capital and his or her financial knowledge/decision-making ability. Two of the studies focus on the financial topic of investments, analyzing the relationship between human capital investment and cryptocurrency investment and investment knowledge, while the remaining paper analyzes the association between human capital investment and retirement preparation. Utilizing the 2018 and 2021 National Financial Capabilities Studies (NFCS) datasets, these papers estimate probit, ordered probit, and ordinary least squares (OLS) models to examine the variable relationships. The NFCS datasets are funded by the FINRA Investor Education Foundation and provide cross-sectional survey data that analyze the financial capabilities and investment decisions of U.S. adults. The underlying theoretical motivation for these studies is human capital investment, a theory pioneered by the individual works of Gary Becker and Theodore Schultz during the early 1960’s. Results indicate a positive association between the use of a financial advisor, a measure of human capital investment through leverage of professional expertise, and cryptocurrency investment. The implication of this finding may suggest the importance of a professional’s fiduciary duty to understand cryptocurrency investment and the potential portfolio impact. Additional results show a positive association between personal human capital investment and retirement preparation. Finally, results show a positive relationship between participation in a financial education program and investment knowledge. Each of these findings provide evidence of the benefit and individual can receive through financial human capital investment regarding financial decision-making.

Embargo status: Restricted until 09/2024. To request the author grant access, click on the PDF link to the left.

Financial Planning, Cryptocurrency, Retirement Planning, Human Capital, Financial Education, Investment Knowledge