Nudging and Financial Literacy: A Behavioral and Quantitative Analysis of Financial Decision-Making

Abstract

Financial literacy is considered a critical determinant of individual financial well-being. However, traditional financial education programs often fail to translate knowledge into actual behavioral change. Behavioral economics offers an alternative approach through nudging, which subtly influences decision-making without restricting freedom of choice. This study examines the impact of nudging interventions on financial behavior using quantitative analysis, factor analysis, and Structural Equation Modeling (SEM). Primary data were collected from 210 respondents through a structured questionnaire. Statistical techniques including correlation, regression, reliability analysis, exploratory factor analysis (EFA), and SEM were employed. The findings reveal that nudging interventions significantly improve savings behavior, investment participation, and budgeting discipline. The study concludes that combining behavioral interventions with financial literacy initiatives can substantially enhance financial decision-making.