Behavioural Characteristics and Financial Distress

likely than disorganised individuals to run out of money.

In the second column of Table 9, the results for the UK sample only are shown, where
the effect of financial literacy on financial distress is assessed. There are no major differences
in these results relative to the earlier findings; again being financially literate reduces the
probability of financial distress.

Next I re-run the regressions using “Arrears” as the dependent variable. In terms of
the significance of the various coefficients, the results are broadly similar to those shown
in the first column, though the coefficient sizes vary slightly. In particular, having three or
more dependent children increases the probability of falling into arrears while there is also
again a significant difference between the British and Irish respondents. The behavioural
and time preference traits again show up as having an important impact on the incidence
of financial distress, though the size of the coefficients on these variables is smaller than
with ‘milder’ forms of financial difficulties.

Finally, in column 4 the results for the UK sample are reported. Being financially
literate again reduces the probability of experiencing financial distress, in this case falling
into arrears, by up to 6 per cent.

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