Hostname: page-component-cd9895bd7-dk4vv Total loading time: 0 Render date: 2024-12-25T06:48:08.681Z Has data issue: false hasContentIssue false
  • English
  • Français

Financial literacy around the world: an overview

Published online by Cambridge University Press:  11 October 2011

ANNAMARIA LUSARDI  and
OLIVIA S. MITCHELL
ANNAMARIA LUSARDI
Affiliation:
The George Washington University School of Business and Netspar (e-mail: alusardi@gwu.edu)
OLIVIA S. MITCHELL
Affiliation:
The Wharton School, University of Pennsylvania (e-mail: mitchelo@wharton.upenn.edu)
Get access Rights & Permissions [Opens in a new window]

Abstract

In an increasingly risky and globalized marketplace, people must be able to make well-informed financial decisions. New international research demonstrates that financial illiteracy is widespread in both well-developed and rapidly changing markets. Women are less financially literate than men,the young and the old are less financially literate than the middle-aged, and more educated people are more financially knowledgeable. Most importantly, the financially literate are more likely to plan for retirement. Instrumental variables estimates show that the effects of financial literacy on retirement planning tend to be underestimated. In sum, around the world, financial literacy is critical to retirement security.

Keywords

Financial literacyretirement planningcross country analysis
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 10 , Issue 4 , October 2011 , pp. 497 - 508
Copyright
Copyright © Cambridge University Press 2011

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ameriks, John, Caplin, Andrew, and Leahy, John (2003) Wealth accumulation and the propensity to plan. Quarterly Journal of Economics, 68: 1007–1047.CrossRefGoogle Scholar
Atkinson, Adele, McKay, Stephen, Kempson, Elaine, and Collard, Sharon (2007) Levels of financial capability in the UK: results of a baseline survey. Public Money & Management, 27(1): 29–36.CrossRefGoogle Scholar
Atkinson, Adele and Messy, Flore-Anne (2011) Assessing Financial Literacy in 12 Countries: an OECD/INFE International Pilot Exercise. Journal of Pension Economics & Finance, 10: 657–665.Google Scholar
Banks, James and Oldfield, Zoe (2007) Understanding pensions: cognitive functions, numerical ability and retirement saving. Fiscal Studies, 28(2): 143–170.CrossRefGoogle Scholar
Behrman, Jere, Mitchell, Olivia S., Soo, Cindy, and Bravo, David (2010) Financial Literacy, Schooling, and Wealth Accumulation. NBER WP 16452.Google Scholar
Chai, Jingjing, Horneff, WolframMaurer, Raimond, and Mitchell, Olivia S. (2010) Extending Life Cycle Models of Optimal Portfolio Choice: Integrating Flexible Work, Endogenous Retirement, and Investment Decisions with Lifetime Payouts. NBER WP 15682 January.CrossRefGoogle Scholar
Christelis, Dimitris, Jappelli, Tullio, and Padula, Mario (2010) Cognitive abilities and portfolio choice. European Economic Review, 54: 18–38.CrossRefGoogle Scholar
Financial Industry Regulatory Authority (FINRA) (2010) Financial Capability in the United States: National Survey, Executive Summary. Washington, DC, available at http://www.finrafoundation.org/resources/research/p120478Google Scholar
Hastings, Justine and Tejeda-Ashton, Lydia (2008) Financial Literacy, Information, and Demand Elasticity: Survey and Experimental Evidence from Mexico. NBER Working Paper No. 14538.Google Scholar
Hastings, Justine and Mitchell, Olivia S. (2011) How Financial Literacy and Impatience Shape Retirement Wealth and Investment Behaviors. NBER Working Paper No. 16740.CrossRefGoogle Scholar
Hastings, Justine, Mitchell, Olivia S., and Chyn, Eric (2010) Fees, Framing, and Financial Literacy in the Choice of Pension Managers. Pension Research Council Working Paper, Wharton School. Summer.CrossRefGoogle Scholar
Hilgert, Marianne, Hogarth, Jeanne, and Beverly, Sondra (2003) Household financial management: the connection between knowledge and behavior. Federal Reserve Bulletin, 89: 309–322.Google Scholar
Lusardi, Annamaria (1999) Information, expectations, and savings for retirement. In Aaron, Henry (ed.), Behavioral Dimensions of Retirement Economics. Washington, DC: Brookings Institution Press and Russell Sage Foundation. pp. 81–115.Google Scholar
Lusardi, Annamaria (2009) U.S. Household savings behavior: the role of financial literacy, information and financial education programs. In Foote, C., Goette, L. and Meier, S. (eds), Policymaking Insights from Behavioral Economics. Federal Reserve Bank of Boston. pp. 109–149.Google Scholar
Lusardi, Annamaria (2011) Americans’ Financial Capability. Report prepared for the Financial Crisis Inquiry Commission, and NBER Working Paper No. 17103.CrossRefGoogle Scholar
Lusardi, Annamaria and Beeler, Jason (2007) Saving between cohorts: the role of planning. In Madrian, B., Mitchell, O. and Soldo, B. (eds), Redefining Retirement: How Will Boomers Fare? Oxford: Oxford University Press. pp. 271–295.CrossRefGoogle Scholar
Lusardi, Annamaria and Mitchell, Olivia S. (2007 a) Baby boomer retirement security: the role of planning, financial literacy, and housing wealth. Journal of Monetary Economics, 54: 205–224.Google Scholar
Lusardi, Annamaria and Mitchell, Olivia S. (2007 b) Financial literacy and retirement preparedness: evidence and implications for financial education. Business Economics, 42(1): 35–44.Google Scholar
Lusardi, Annamaria and Mitchell, Olivia S. (2008 a) Planning and financial literacy. How do women fare? American Economic Review, 98(2): 413–417.CrossRefGoogle Scholar
Lusardi, Annamaria and Mitchell, Olivia S. (2008 b) How Much Do People Know About Economics and Finance? Financial Illiteracy and the Importance of Financial Education, Policy Brief No. 5, MRRC, March.Google Scholar
Lusardi, Annamaria and Mitchell, Olivia S. (2009) How Ordinary Consumers Make Complex Economic Decisions: Financial Literacy and Retirement Readiness. NBER Working Paper No. 15350.Google Scholar
Lusardi, Annamaria and Tufano, Peter (2009) Debt Literacy, Financial Experiences, and Overindebtedness. NBER Working Paper No. 14808.CrossRefGoogle Scholar
Lusardi, Annamaria, Mitchell, Olivia S., and Curto, Vilsa (2010) Financial literacy among the young. Journal of Consumer Affairs, 44(2):358–380.Google Scholar
Lusardi, Annamaria and Mitchell, Olivia S. (2011) Financial literacy and planning: implications for retirement wellbeing. In Lusardi, A. and Mitchell, O. S. (eds), Financial Literacy: Implications for Retirement Security and the Financial Marketplace. Oxford: Oxford University Press. Forthcoming.Google Scholar
Mitchell, Olivia S. (2011) Managing risks in defined contribution plans: what does the future hold? In Fuchita, Yasuyuki, HerringRichard, J. Richard, J. and LitanRobert, E. Robert, E. (eds), Growing Old: Paying for Retirement and Institutional Money Management After the Financial Crisis. Brookings Institution Press and Nomura Institute of Capital Markets Research. Forthcoming.Google Scholar
Moore, Danna (2003) Survey of Financial Literacy in Washington State: Knowledge, Behavior, Attitudes, and Experiences. Technical Report No. 03–39, Social and Economic Sciences Research Center, Washington State University.Google Scholar
National Council on Economic Education (NCEE) (2005) What American Teens and Adults Know about Economics. Washington, DC: NCEE.Google Scholar
Organization for Economic Co-operation and Development (OECD) (2005) Improving Financial Literacy: Analysis of Issues and Policies. Paris, France: OECD.Google Scholar
Poterba, James, Venti, Steve, and Wise, David (2008) The changing landscape of pensions in the United States. In Lusardi, A. (ed.), Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs. Chicago: University of Chicago Press. pp. 17–46.Google Scholar
van Rooij, Maarten, Lusardi, Annamaria, and Alessie, Rob (2011) Financial literacy and stock market participation. Journal of Financial Economics, 101(2):449–472.Google Scholar
Yakoboski, Paul and Dickemper, Jennifer (1997) Increased saving but little planning: results of the 1997 retirement confidence survey. EBRI Issue Brief, 191: 1–21.Google Scholar