“The Role of Social Media Use in American Consumers’ Financial Decisions: Exploring the Impact of Financial Literacy, Need for Cognition, Political Orientation, and Consumer Demographics”

Consumer reliance on social media has been steadily increasing over the past decade. Social media sources are relied upon for a range of consumer decisions, from choosing what to eat, who to vote for, and where to invest. Social media platforms have become central sources of information for consumers, especially in the United States. Despite consumers’ growing reliance on information disseminated through social media, little is known on how such information affects consumers’ financial decisions. One’s propensity to rely on social media sources may be influenced by factors such as one’s level of financial literacy, the desire to engage in elaborate cognitive processes, age, income, political orientation, and other similar variables. This study utilizes a national sample of American consumers to examine how such factors influence the likelihood that a consumer would rely on social media in making financial decisions. This area is of great importance to consumer protection initiatives in light of the massive volume of faulty information contaminating social media platforms and the vulnerability that consumers have when making critical financial decisions. The study identifies market segments with varying degrees of vulnerability and social media use related to financial decisions.