Financial Knowledge and 401(K) Investment Performance

Clark, Robert L.; Lusardi, Annamaria; Mitchell, Olivia S.

doi:10.2139/ssrn.2585239

Cited by 17 publications

(24 citation statements)

References 26 publications

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“…Similarly, Kim et al (2005) found that attending financial education workshops was positively related to both employees' and their spouses' contributions to retirement savings plans. Clark et al (2014) explored associations between financial knowledge and retirement savings plan performance and found that risk-adjusted annual expected returns were 130 basis points higher for the most financially knowledgeable employees.…”

Section: Impact Of Financial Education On Financial Capabilitymentioning

confidence: 99%

Consumer financial education and financial capability

Xiao

O’Neill

2016

Int J Consumer Studies

248

177

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The purpose of this study was to explore potential effects of financial education on the financial capability of American consumers. Data from the 2012 National Financial Capability Study were used to test the hypothesis that financial education is positively associated with financial capability. Four financial literacy and behavior variables were used to form a financial capability index. Multivariate linear regression results showed that, after controlling for demographic and financial variables, respondents who ever received financial education had higher scores in all financial capability indicators (objective financial literacy, subjective financial literacy, desirable financial behavior, perceived financial capability, and the financial capability index). In addition, high school, college, and workplace financial education variables showed positive associations with these financial capability indicators. Additional state comparison analyses provided evidence suggesting high school financial education may have direct impacts and spillover effects on consumer financial capability.

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Section: Impact Of Financial Education On Financial Capabilitymentioning

confidence: 99%

Consumer financial education and financial capability

Xiao

O’Neill

2016

Int J Consumer Studies

248

177

View full text Add to dashboard Cite

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“…For instance, Allen et al () assessed employer‐provided retirement seminars and showed that these seminars boosted financial literacy and influenced people's ability to plan for retirement . In our previous research (Clark, Lusardi, and Mitchell ; Lusardi, Michaud, and Mitchell ), we examined whether financial literacy is linked to investment returns and we found that more financially literate employees are better investors. Moreover, the higher returns earned by the more financially savvy are an important contributor to household wealth inequality.…”

Section: Introductionmentioning

confidence: 95%

“…A more detailed analysis of how financial literacy influences the investment behavior and portfolio allocation of FR employees is available in Clark, Lusardi, and Mitchell (). This analysis shows that individuals with higher levels for financial literacy tend to have less idiosyncratic risk and earn higher expected risk‐adjusted returns.…”

mentioning

confidence: 99%

Employee Financial Literacy and Retirement Plan Behavior: A Case Study

2016

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This article uses administrative data on all active employees of the Federal Reserve (FR) System to examine participation in and contributions to the Thrift Saving Plan, the System's defined contribution (DC) plan. We link to administrative records a unique employee survey of economic/demographic factors including a set of financial literacy questions. Not surprisingly, FR employees are substantially more financially literate than the population at large. Most importantly, financially savvy employees are also most likely to participate in their DC plan. Sophisticated workers contribute three percentage points more of their earnings to the DC plan than do the less knowledgeable, and they hold more equity in their pension accounts. We examine changes in employee plan behavior 1 year after employees completed a Learning Module about retirement planning, and we compare it to baseline patterns. We find that those employees who completed the Learning Module were more likely to start contributing and less likely to have stopped contributing to the DC plan postsurvey. In sum, employerprovided learning programs are shown to significantly impact employee retirement saving decisions and consistent with a lot of other research, higher levels of financial literacy are found to have a beneficial impact on retirement saving patterns. (JEL J3, H7)

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“…A more detailed analysis of how financial literacy influences portfolio outcomes is taken up inClark, Lusardi and Mitchell (2014).…”

mentioning

confidence: 99%

Employee Financial Literacy and Retirement Plan Behavior: A Case Study

Clark

Lusardi

Mitchell

2015

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This paper uses administrative data on all active employees of the Federal Reserve System to examine participation in and contributions to the Thrift Saving Plan, the system's defined contribution (DC) plan. We have appended to the administrative records a unique employee survey of economic/demographic factors including a set of financial literacy questions. Not surprisingly, Federal Reserve employees are more financially literate than the general population; furthermore, the most financially savvy are also most likely to participate in and contribute the most to their plan. Sophisticated workers contribute three percentage points more of their earnings to the DC plan than do the less knowledgeable, and they hold more equity in their pension accounts. Finally, we examine changes in employee plan behavior a year after the financial literacy survey and compare it to the baseline. We find that employees who completed an educational module were more likely to start contributing and less likely to have stopped contributing to the DC plan post-survey.

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Financial Knowledge and 401(K) Investment Performance

Cited by 17 publications

References 26 publications

Consumer financial education and financial capability

Consumer financial education and financial capability

Employee Financial Literacy and Retirement Plan Behavior: A Case Study

Employee Financial Literacy and Retirement Plan Behavior: A Case Study

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