Financial literacy can keep you out of hospital

Those with higher financial literacy are at lower risk of being hospitalised, according to a recent study.

"Our findings support the notion that financial literary - the ability to access, understand, and utilize financial concepts - may represent a modifiable risk factor associated with lower likelihood of being hospitalized in later life," saidlead author Bryan D. James of Rush University Medical Center, Chicago.

The study included 388 older adults without dementia, enrolled in an ongoing study of factors affecting healthy aging. All participants completed a questionnaire assessing their financial literacy. The assessment included the ability to perform calculations (numeracy) as well as knowledge of financial concepts (stocks and bonds, compound interest, etc).

Financial literacy score was evaluated as a predictor of the risk of hospital admission, with adjustment for a wide range of other factors. During an average follow-up of 1.8 years, 30 percent of the older adults were hospitalised at least once.

Lower financial literacy was associated with a higher risk of being admitted to the hospital. Average financial literacy scores (on a 23-point scale) were 11 points for older adults who were hospitalised versus 13 points for those who were not. The association remained significant after adjustment for a wide range of factors, including income and indicators of physical and mental health.

In the final model, a 4-point increase in financial literacy score (the standard deviation) was associated with a 35 percent lower risk of hospitalization. The only other independent risk factors were older age and problems with daily activities for independent living--for example, cooking and cleaning.

The link between financial literacy and hospitalisation risk was mainly related to knowledge of financial concepts, not the ability to do calculations. There association appeared stronger for elective hospitalizations, rather than urgent or emergency ones.

Based on the findings, "the ability to understand and utilize financial concepts may be important to keeping older adults out of the hospital," according to James and coauthors.

How does financial literacy affect hospitalisation risk? The study couldn't draw any conclusions. Higher income and better health could play a role, but the association remained significant after adjustment for these factors. Based on the association with elective hospitalisations, the researchers suggested that financial literacy might affect medical decision-making and related financial factors, such as which procedures are covered by Medicare or private insurance.

The study appears in journal Medical Care.