Financial Literacy and Economic Outcomes: Evidence and Policy Implications

TitleFinancial Literacy and Economic Outcomes: Evidence and Policy Implications
Publication TypeJournal Article
Year of Publication2015
AuthorsMitchell, OS, Lusardi, A
JournalThe Journal of Retirement
Volume3
Issue1
Pagination107 - 114
Date PublishedJan-07-2015
ISSN Number2326-6899
KeywordsDecision making, Education, Finances, Financial literacy, Gender Differences, Savings
Abstract

This article reviews what we have learned over the past decade about financial literacy and its relationship to financial decision making around the world. We used three questions to survey people in several countries about their level of fundamental knowledge of economics and finance, which they need to function as effective decision makers. We find that levels of financial literacy are low not only in the United States but also in many other countries, including those with well-developed financial markets. Moreover, financial illiteracy is particularly acute for some demographic groups, especially women and those who are less educated. These findings are important, since financial literacy is linked to borrowing, saving, and spending patterns. We also offer new evidence on financial literacy among high school students, drawing on the 2012 Programme for International Student Assessment implemented in 18 countries. Last, we discuss the implications of this research for policy.

URLhttp://www.iijournals.com/doi/10.3905/jor.2015.3.1.107
DOI10.3905/jor.2015.3.1.107
Short TitleRetirement
Citation Key8560
PubMed ID28553655
PubMed Central IDPMC5445906