Is Financial Knowledge Associated with Past-Due Medical Debt?

Brief

Is Financial Knowledge Associated with Past-Due Medical Debt?

Abstract

Medical debt is one of the most common forms of debt in collections. Consumers can mitigate this risk, but they need to know about effective strategies. Using the National Financial Capability Study, we estimate that nonelderly adults who answer four or five questions correctly on a five-question financial knowledge quiz are 7 percentage points less likely to have past-due medical debt than similar people who answer zero or one question correctly, even after accounting for differences in health insurance coverage, permanent disability status, and socioeconomic characteristics. Yet, spreading financial knowledge remains a challenge; self-reported financial education as measured in this study is not associated with a reduced likelihood of having past-due medical debt.

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