Journal of Pension Economics and Finance

Articles

Financial literacy around the world: an overview

ANNAMARIA LUSARDIa1 and OLIVIA S. MITCHELLa2

a1 The George Washington University School of Business and Netspar (e-mail: [email protected])

a2 The Wharton School, University of Pennsylvania (e-mail: [email protected])

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.

(Online publication October 11 2011)

Key Words:

  • Financial literacy;
  • retirement planning;
  • cross country analysis