Financial Literacy and Retirement Planning in Germany

Bucher‒Koenen, Tabea; Lusardi, Annamaria

doi:10.2139/ssrn.1813744

“…As pointed out by Lusardi and Mitchell (2014), most studies find that the OLS estimate of the impact of financial literacy is biased downward, but the estimates differ a lot across papers, and the magnitude of the bias varies largely in the literature. The instrumental variable estimates range from three times larger than the corresponding OLS estimates (Jappelli and Padula, 2013b;van Rooij et al, 2012) to thirteen times larger than OLS (Bucher-Koenen and Lusardi, 2011). Our findings confirm the downward bias of the OLS estimate, showing that the causal effect is four times larger.…”

Section: Related Literaturesupporting

confidence: 72%

“…However, van Rooij et al (2012) are skeptical about the validity of the exclusion restriction for the instrumental variable they use, and they discuss the issue at length in the paper, adding a rich set of controls to their baseline specification. Other studies hinge on the idea that the respondent's financial literacy is influenced by financial knowledge of peers or reference groups Bucher-Koenen and Lusardi, 2011;Fornero and Monticone, 2011;Jappelli and Padula, 2013a;Klapper et al, 2013;Klapper and Panos, 2011;van Rooij et al, 2012). The assumption that lies behind this identification strategy is that the respondent cannot influence the peers' experience significantly, i.e., there is no "reflection problem" (Manski, 1993).…”

Section: Related Literaturementioning

confidence: 99%

Adult financial literacy and households’ financial assets: the role of bank information policies

Fort

¹

,

Manaresi

²

,

Trucchi

³

2016

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We investigate the role of bank information policies in fostering the accumulation of financial knowledge. Exploiting the exogenous variability induced by the presence of a consortium of banks in Italy (PattiChiari), we find that these policies are effective for a small subsample of the population (5-10%) and lead to an increase in financial literacy by about 10%, on average. Compliance is highest among low-educated respondents older than 60 years. We use these policies as an instrumental variable to estimate the effect of financial literacy on financial assets. We find that one standard deviation increase in financial literacy determines an increase in household financial assets by 35% of a standard deviation (8,000 euros). Effects are heterogeneous in the population and highest among elderly low-educated households.

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“…Earlier studies have shown that financial literacy has a positive effect on long-term savings and retirement planning (Lusardi andMitchell, 2007, Clark et al, 2012), stock market participation (van Rooij et al, 2011a), portfolio diversification (Guiso and Jappelli, 2008), wealth (Gustman et al, 2012, van Rooij et al 2012, Jappelli and Padula, 2013, and informed use of debt (Lusardi andTufano, 2009, Stango andZinman, 2009). Results in Section 5 and 6…”

Section: The Impact Of Financial Literacy On Financial Decisionsmentioning

confidence: 99%

Childhood roots of financial literacy

Grohmann

¹

,

Kouwenberg

²

,

Menkhoff

³

2015

Journal of Economic Psychology

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We use the concept of financial socialization and aim to represent three major agents of financial socialization: family, school and work. Thus we compile twelve relevant childhood characteristics in a new survey study and examine their relation to financial literacy, while controlling for established socio-demographic characteristics. We find in a mediation analysis that both family and school positively affect the financial literacy of adults. Moreover, financial literacy and school related variables also have a direct effect on financial behavior. This suggests that family factors and schooling work through complementary channels. Terms of use: Documents in EconStor may Childhood Roots of Financial Literacy 1 IntroductionMany economic decisions require basic knowledge of financial concepts, such as interest rates and inflation. However, many people lack this type of knowledge. The degree of this deficiency has been systematically researched using tests, which collect "financial literacy"scores. There is growing evidence that individuals who possess higher financial literacy have better economic outcomes as it improves financial decision making (e.g., Lusardi and Mitchell, 2014). At the same time, these studies also find that in many countries and many population groups, financial literacy levels are low. In the USA only 30.2% can answer all three of the standard financial literacy questions. This number is not much higher at 44.8% and 53.2% in the Netherlands and Germany respectively (Lusardi and Mitchell, 2014, BucherKoenen and Lusardi, 2011, van Rooij et al., 2011b Several variables have been found to be linked to a person's financial literacy. These factors include socio-demographic variables in the way that better education, higher age or higher incomes are related to higher financial literacy. Many of these factors seem to be at least partially shaped by childhood experiences of today's adults (see Lusardi et al., 2010).Indeed, several studies either look at the impact of some childhood experiences on financial behavior (e.g., Webley and Nyhus, 2013, Bucciol andVeronesi, 2014), or use a specific childhood variable as instrument for financial literacy (Behrman et al., 2010, 2012, van Rooij et al., 2011b. Thus many childhood variables have been considered in relation to financial literacy and financial behavior. What remains less clear is: what are the main channels through which childhood experiences affects financial literacy and financial be...

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“…One test was conducted in February 2013 -prior to the initial start of the program, called pre-test-and the second one was conducted after the full development of Level I in May 2013 -the post-test. 9 Schools in the evaluation sample gave the material in the third year of high school only. In addition, students in the fourth year of high school went through the same set of …nancial literacy tests but were not taught the …nancial literacy material.…”

Section: Evaluation In 2012-2013mentioning

confidence: 99%

“…9 To ensure comparability of results between the pre-test and post-test, two parallel forms (A and B) were constructed. In the pre-test each form consists of 30 items: 20 are common, and 10 items are speci…c to each form.…”

Section: Evaluation In 2012-2013mentioning

confidence: 99%

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

Hospido

¹

,

Villanueva

²

,

Zamarro

³

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu We estimate the impact on objective measures of financial literacy of a 10-hours financial education program among 15-year old students in compulsory secondary schooling. We use a matched sample of students and teachers in Madrid and two different estimation strategies. Firstly, we use reweighting estimators to compare the performance in a test of financial knowledge of students in treatment and control schools. In another specification, we use school fixed-effect estimates of the effect of the course on change in the score in tests of financial knowledge. The program increased treated students' financial knowledge by between one fourth and one third of a standard deviation. We uncover heterogeneous effects, as students in private schools did not increase their knowledge much, possibly due to a less intensive implementation of the program. Secondly, we analyze the bias that arises because the set of schools that participate in financial literacy programs is not random. Such selection bias is estimated as the pre-program performance in financial PISA of students in applicant schools relative to a nationally representative sample of schools. We then study if estimators that condition on school and parental characteristics mitigate selection bias. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S

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Financial Literacy and Retirement Planning in Germany

Cited by 39 publications

References 29 publications

Adult financial literacy and households’ financial assets: the role of bank information policies

Adult financial literacy and households’ financial assets: the role of bank information policies

Childhood roots of financial literacy

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

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