Revisiting the Financial Knowledge–Behavior Link: Longitudinal, Bidirectional, and Item‐Level Evidence on Financial Deliberation

This study re‐examines the relationship between financial knowledge and financial behavior using three‐wave panel data from a baseline‐representative sample of 4389 adults in Poland. We compare cross‐sectional regressions, random‐effects panel models, long‐difference models, and random intercept cross‐lagged panel models (RI‐CLPM). We estimate the relationship between financial knowledge and 24 individual financial behaviors, three factor‐informed behavioral domains, and an aggregated financial behavior index. We use RI‐CLPM to examine both knowledge‐to‐behavior and behavior‐to‐knowledge pathways. The results depend strongly on model specification. Cross‐sectional and random‐effects models indicate broad positive associations, but these associations narrow substantially in long‐difference and RI‐CLPM specifications. Changes in financial knowledge are associated with changes in only five behaviors, mainly deliberative actions such as assessing affordability, weighing alternatives, evaluating needs, and comparing prices. No individual financial behavior significantly predicts subsequent financial knowledge.