Working Paper: NBER ID: w15469
Authors: Annamaria Lusardi; Olivia S. Mitchell; Vilsa Curto
Abstract: This paper analyzes new data on financial literacy and financial sophistication from the 2008 Health and Retirement Study. We show that financial literacy is lacking among older individuals and for the first time explore additional questions on financial sophistication which proves even scarcer. For this sample of older respondents over the age of 55, we find that people lack even a rudimentary understanding of stock and bond prices, risk diversification, portfolio choice, and investment fees. In view of the fact that individuals are increasingly required to take on responsibility for their own retirement security, this lack of knowledge has serious implications.
Keywords: No keywords provided
JEL Codes: D14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial literacy (G53) | retirement planning (J26) |
| retirement planning (J26) | wealth accumulation (E21) |
| financial literacy (G53) | wealth accumulation (E21) |
| demographic factors (J11) | financial literacy (G53) |
| financial literacy (G53) | investment behaviors (G41) |
| lack of financial literacy (G53) | poor financial decisions (D14) |