How Financial Literacy Affects Financial Decisions and Well-Being of Italian Households.

In recent years, the issue of financial literacy has taken on a central role in the economic and social debate, as it is a key determinant of individuals’ ability to make informed decisions regarding saving, investing, and financial protection. However, despite growing attention, the average level of financial competence in Italy remains among the lowest in Europe, with significant implications for household economic stability and, more broadly, for collective well-being. This thesis — “How Financial Literacy Affects Financial Decisions and Well-Being of Italian Households” — systematically analyzes the relationship between the degree of financial literacy and the economic behavior of Italian households, using microdata from the Bank of Italy’s Survey on Household Income and Wealth. The objective is twofold: on the one hand, to examine how financial literacy influences major financial decisions — from credit use to savings management; on the other hand, to measure how it reflects on individuals’ economic and subjective well-being. To this end, the study combines descriptive analyses and econometric models, including variables representative of well-being and economic behavior. The results show that higher levels of financial literacy are associated with greater participation in financial markets, broader portfolio diversification, better retirement planning capabilities, and a higher perceived sense of security in managing economic resources. Conversely, individuals with low levels of literacy tend to display a lower propensity to invest, a more frequent reliance on debt, and greater difficulty in “making ends meet.” In conclusion, the thesis highlights that financial literacy is not merely a cognitive skill, but a true enabling factor for economic and social well-being, capable of exerting a tangible impact on the quality of life and financial stability of Italian households.