Financial Literacy and Financial Planning in France

Abstract

We study financial literacy in France using the PATER survey and following the Lusardi and Mitchell (2011c) approach. We find that some subpopulations are less financially literate than others: women, young and old people as well as less-educated people are more likely to face difficulties when dealing with fundamental financial concepts such as risk diversification and inflation and interest compounding. We also find some differences in financial knowledge depending on the political opinion of the respondents. Finally we show that these differences in financial knowledge are correlated with differences in the propensity to plan: people who score higher on the financial literacy questions are more likely to be engaged in the preparation of a clearly defined financial plan

Finance for All: The Impact of Financial Literacy Training in Compulsory Secondary Education in Spain

“…In particular, it consists of a 10-hours course in FE with support from a website with guides and training materials. 4 In this paper, we evaluate this intervention using data on twenty-two schools in the region of Madrid, using matched data on the teachers who gave the course and the family background and …nancial literacy scores of students. Our …rst estimation strategy compares the scores in a …nal exam on …nancial knowledge of those students that receive the FE course (the treatment) with the hypothetical outcome that these same students would have obtained if they had not received classes -who could have acquired …nancial knowledge through informal channels such as the family.…”

“…The latter result highlights the relevance of obtaining information on program implementation. 4 Section 2 contains more information about this program.…”

Why Financial Advice Cannot Substitute for Financial Literacy?

“…About two-thirds of the original sample gets the question on risk diversification right while this share is 73% in the econometric sample. Using PATER 2011, Arrondel et al (2013) show that these agregate figures hide large differences among population subgroups. Women, the youth and the elderly as well as the less educated tend to have a lower understanding of basic financial concepts.…”

“…Financial illiteracy has been shown to have important consequences for household's financial well-being. Financially unsophisticated households tend to save less than others, especially for retirement (Lusardi and Mitchell 2007a;Banks et al 2011;Arrondel et al 2013). They are also less prone to hold stocks (van Rooij et al 2011;Arrondel et al 2014), to accumulate wealth (van Rooij et al 2012) and tend to get over-indebted more often than other households (Lusardi and Tufano 2009;Gerardi et al 2010).…”

“…In France, most households lack command of basic economic and financial concepts (Arrondel et al 2013) and tend to rely on financial advisors when they decide to make a financial decisions. About 49% of French households (PATER Survey 2011) declare to seek financial information mainly from their bank or from independent financial advisors (conseillers en investissements financiers).…”