Opening the black box of students’ economic behavior in higher education: do formal and informal education really matter?

Abstract

Poor economic behavior and low levels of economic literacy (EL) among university students remain persistent concerns in developing countries, where young adults must navigate increasingly complex economic decisions. Previous studies often conceptualize education as a single construct or examine formal education and family-based learning separately, leaving the psychological mechanisms linking these educational experiences to economic behavior insufficiently understood. Drawing on social cognitive theory (SCT), this study examines the influence of instructional quality as a form of formal education and parental economic socialization as a form of informal education on students’ economic behavior, while investigating the mediating roles of EL and self-efficacy (SE). Data were collected from 291 undergraduate students from faculties of economics and business in East Java, Indonesia, and analyzed using partial least squares structural equation modeling (PLS-SEM). The results show that instructional quality and parental economic socialization significantly influence students’ economic behavior both directly and indirectly through EL and SE. These findings indicate that students’ economic behavior is shaped not only by educational environments but also by cognitive and psychological processes. The study highlights the importance of strengthening collaboration between universities and families to foster EL, SE, and responsible economic decision-making among students.