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Financial literacy around the world: an overview

Published online by Cambridge University Press:  11 October 2011

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)

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.

Type
Articles
Copyright
Copyright © Cambridge University Press 2011

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