Working Paper: NBER ID: w17110
Authors: Tabea Bucherkoenen; Annamaria Lusardi
Abstract: We examine financial literacy in Germany using data from the SAVE survey. We find that knowledge of basic financial concepts is lacking among women, the less educated, and those living in East Germany. In particular, those with low education and low income in East Germany have little financial literacy compared to their West German counterparts. Interestingly, there is no gender disparity in financial knowledge in the East. In order to investigate the nexus of causality between financial literacy and retirement planning, we develop an IV strategy by making use of regional variation in the financial knowledge of peers. We find a positive impact of financial knowledge on retirement planning.
Keywords: financial literacy; retirement planning; Germany
JEL Codes: D14; D91
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) |
| Financial knowledge of peers (G53) | Financial literacy (G53) |
| Financial knowledge of peers (G53) | Retirement planning (J26) |