Financial literacy, retirement planning, and household wealth

Arbeitspapier

There is ample empirical evidence documenting widespread financial illiteracy and limited pension knowledge. At the same time, the distribution of wealth is widely dispersed and many workers arrive on the verge of retirement with few or no personal assets. In this paper, we investigate the relationship between financial literacy and household net worth, relying on comprehensive measures of financial knowledge designed for a special module of the DNB (De Nederlandsche Bank) Household Survey. Our findings provide evidence of a strong positive association between financial literacy and net worth, even after controlling for many determinants of wealth. Moreover, we discuss two channels through which financial literacy might facilitate wealth accumulation. First, financial knowledge increases the likelihood of investing in the stock market, allowing individuals to benefit from the equity premium. Second, financial literacy is positively related to retirement planning, and the development of a savings plan has been shown to boost wealth. Overall, financial literacy, both directly and indirectly, is found to have a strong link to household wealth.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CFS Working Paper ; No. 2011/21

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Consumer Economics: Empirical Analysis ; Retirement; Retirement Policies
• Thema: Financial Education ; Savings and Wealth Accumulation ; Retirement Preparation ; Knowledge of Finance and Economics ; Overconfidence ; Stock Market Participation ; Alterssicherung ; Sparen ; Finanzwissen ; Altersgrenze ; Vertrauen ; Wertpapierspekulation ; Niederlande

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): van Rooij, Maarten ; Lusardi, Annamaria ; Alessie, Rob J. M.
• Ereignis: Veröffentlichung
• (wer): Goethe University Frankfurt, Center for Financial Studies (CFS)
• (wo): Frankfurt a. M.
• (wann): 2011

Weitere Informationen

• Handle: http://hdl.handle.net/10419/57373
• URN: urn:nbn:de:hebis:30-115373
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ