An Analysis of the Nature of the Relationship Between SAT Scores and Financial Literacy

The 2008 Jump$tart study, assessing the financial literacy of American high school seniors and college students, reported an association between self-reported SAT scores and financial literacy scores. In the present study, an even stronger relationship was found between actual SAT scores and financial literacy scores from an abbreviated version of the Jump$tart test. Given that SAT scores are known to be correlated to parental income, also investigated was whether the relationship exists because the SAT serves as a proxy for parental income. By means of multiple regressions, it was determined that this relationship cannot be entirely explained by parental income.