Working Paper: NBER ID: w17108
Authors: Annamaria Lusardi; Olivia S. Mitchell
Abstract: We examine financial literacy in the United States using the new National Financial Capability Study, wherein we demonstrate that financial literacy is particularly low among the young, women, and the less-educated. Moreover, Hispanics and African-Americans score the least well on financial literacy concepts. Interestingly, all groups rate themselves as rather well-informed about financial matters, notwithstanding their actual performance on the key literacy questions. Finally, we show that people who score higher on the financial literacy questions are also much more likely to plan for retirement, which is likely to leave them better positioned for old-age. Our results will inform those seeking to target financial literacy programs to those in most need.
Keywords: financial literacy; retirement planning; financial capability; demographics
JEL Codes: D14; D91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| experiencing a significant income shock (D14) | increased likelihood of planning for retirement (J26) |
| financial literacy (G53) | retirement planning (J26) |
| higher financial literacy (G53) | increased retirement planning (J26) |