Debt literacy and debt advice-seeking behaviour among Facebook users: the role of social networks

Professional advice can be perceived as a means to tackleshortcomings in the objectively measuredfinancial literacy ofconsumers. However, most studies suggest that lessfinanciallyliterate individuals are less likely to seek experts'financial advice.At the same time, it has been shown thatfinancial confidence-or subjectively perceivedfinancial literacy-is positively correlatedwith the propensity to request such professional advice. Thisstudy examines these puzzling effects in a sample of 1,055Facebook users in Poland, and within an analytical framework thatallows control of the potential endogeneity offinancial literacy toprofessional advice. A series of regressions applied to the resultsof our survey showed that objective debt literacy-a little-studiedaspect offinancial literacy-was insignificant in explaining advice-seeking behaviour, although the decisions to ask for advice werepositively dependent on subjective debt literacy. Such outcomesprove that subjectivefinancial literacy should be treated as aseparate construct which can predictfinancial behaviour aboveand beyond predictions based on objectivefinancial literacy. Ourfindings also suggest a positive role for social networks ininducing desiredfinancial actions. We found that respondentshaving access to greater resources embedded in their socialnetworks are more inclined to seek professional debt advice.