The Intersection of Financial Literacy, Cognitive Ability, and Numeracy Skills in Pakistani Adults

The evolution of complex financial products is changing the landscape of the global financial system and to make informed financial choices, one must equip themselves with at least the basic financial knowledge. Financial literacy is a life-skill that must be possessed by all. In this study we examine the impact of cognitive ability and numeracy skills on financial literacy among adults in Pakistan. An online survey was conducted from February to April 2022, and responses of 163 individuals were collected on questions relating to demographics, financial literacy, cognitive reflection, and numeracy skills. The results of the study reveal a positive relationship between financial literacy, numeracy skills, cognitive ability, and some socioeconomic characteristics. It was also found out that education, income, and employment status significantly influence financial literacy levels. These findings add to the existing literature on financial literacy and provide valuable insights for policymakers to design effective and targeted financial literacy programs, which also focus on improving numeracy and cognitive skills to enhance individuals' overall financial decision-making skills.