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Planning and Financial Literacy: How Do Women Fare?
Abstract
This study uses data from the module on planning and financial literacy devised for the Health and Retirement Study in 2004. It finds that women display much lower levels of literacy than respondents in the total sample. Lack of literacy has implications for planning: women who are less financially literate are less likely to plan for retirement and be successful planners. These findings have important implications for policy and for programs aimed at fostering financial security. Because financial illiteracy is widespread among women, a one-time financial education seminar is unlikely to sufficiently influence planning and saving decisions. Similarly, education programs targeted specifically at women may be better suited to addressing large differences in preferences, savings needs, and financial knowledge.
... However, research on economic news and its relevance for economic understanding, attitudes, or behavior is lacking (e.g., [13][14][15][16]). Although there is a body of research in finance and economics that has investigated the influencing factors of financial literacy (e.g., [17,18]) and, among others, media use [19][20][21][22], a theoretical and empirical discussion of the role of financial news use for the understanding of financial institutions has been underrepresented in academic research so far (see for an exception: [20] on monetary knowledge). What is more, numerous studies have consistently and repeatedly shown that financial literacy and financial understanding are unequally spread among the public and in various parts of the world [23], being particularly low among women, younger cohorts, and the less educated public [17,18]. ...
... Although there is a body of research in finance and economics that has investigated the influencing factors of financial literacy (e.g., [17,18]) and, among others, media use [19][20][21][22], a theoretical and empirical discussion of the role of financial news use for the understanding of financial institutions has been underrepresented in academic research so far (see for an exception: [20] on monetary knowledge). What is more, numerous studies have consistently and repeatedly shown that financial literacy and financial understanding are unequally spread among the public and in various parts of the world [23], being particularly low among women, younger cohorts, and the less educated public [17,18]. It has therefore become paramount that we investigate how the news media and economic news use can contribute to a better understanding of financial institutions. ...
... However, financial understanding is not just about knowing how inflation works, how compound interests play out, or how to invest efficiently and safely (cf. financial literacy: [17,23]). Instead, financial understanding also expands to the knowledge of the functions and roles of various financial institutions within a democracy. ...
This chapter argues that the news media play an important factor in educating the public about financial institutions. It presents some novel survey results, exploring the role of economic news use for the perceived understanding of financial institutions in Germany and the UK. Two web-based surveys were conducted: one in the UK in winter 2018 and one in Germany in summer 2019. Findings show that economic news use is positively related with a better perceived understanding of financial institutions in both countries, even after controlling for demographics and financial socialization. We find that the level of perceived understanding of financial institutions is positively related with education and income and negatively related with being female. The need for information significantly impacted the relationship between economic news use and understanding of financial institutions in the UK but not in Germany. Practical implications for economic and financial news journalists are discussed.
... Applying Karl Polanyi's insights to the discussed examples of employment, education, and welfare, a degrowth-driven public policy would entail the decommodification of labour, education, healthcare, and life-making activities in the spirit of "public good over private gain, personal and communal embeddedness in land and nature, the localization of economies, secure belonging to communities providing livelihoods but also respect" [141]. In sum, the reformist policies of "inclusive growth" and employment-focused paradigm sideline and politicize more radical forms of empowerment as prescribed both by Amartya Sen's capabilities and Karl Polanyi's embeddedness approaches. ...
... Education is reported as the most dominant factor of FL, and several dimensions of education are significant, including the number of years of education, recency of education, level of education (school or college or university), subjects of study (math, economics, business studies), parent's education, and especially the mother's education [9,55,68,94,140,141,159]. Seeming like a carte blanche, it is necessary to remember that this is merely a correlation between formal education and FL, not causality. ...
... Income is reported to correlate highly with FL [141,225]. Interestingly, Artavanis and Kara [13] have reported an FL wage gap, observing that students and young professionals with low FL invariably draw lower salaries and exacerbate their exposure to adverse income shocks, primarily because their beginning salary expectations are significantly lower than those with high FL. Although low-income levels correlate with low FL, is it due to a correlation between income and education (dropout rates) or income and savings? ...
This study is a thematic attempt to explore the relationship between globalization and human development. It also evaluates whether human development has truly progressed since 1990. The first part of the study describes the genesis of globalization and human development. The second part analyses the political economy of globalization and human development, focusing on how different schools of thought discuss the relationship between both. The last part of the study evaluates human development in terms of health, education, GDP growth, per capita income, the Gender Inequality Index, the Human Development Index, and the Inequality Adjusted Human Development Index specifically in the case of South Asia. This study is based on secondary data sources from 1990 to 2021. The study found that globalization resulted from neo-liberal policies that led to unequal progress in human development in the world as well as in the South Asian region.KeywordsSouth-Asian countriesHuman Development IndexGender Inequality IndexInequity Adjusted Human Development Index
... Az attitűdöt és a preferenciákat a pénzügyi műveltség létfontosságú összetevőjeként kezelik (OECD, 2013). A magas pénzügyi attitűddel rendelkező egyének nagyobb valószínűséggel viszonyultak pozitívan a tervezéshez (Lusardi-Mitchell, 2008, 2011van Rooij et al., 2011;Remund, 2010;Atkinson-Messy, 2012;Agarwalla et al., 2013), alacsonyabb inflációs elvárásokkal rendelkeznek (Bruine de Bruin et al., 2010), nagyobb megtakarítási hajlandóságot mutatnak (Atkinson-Messy, 2012;Agarwalla et al., 2013), kisebb fogyasztási hajlandósággal (Atkinson-Messy, 2012;Agarwalla et al., 2013), valamint magas kockázati toleranciával rendelkeznek (Yu et al., 2015). van Rooij és szerzőtársai (2011) azzal érveltek, hogy a holland háztartások nem mutattak pozitív pénzügyi hozzáállást a nyugdíjtervezéshez, és a holland háztartások válaszadóinak csak egy kis csoportja (12,9%) gondolkodott a nyugdíjazásról. ...
... Ezért elengedhetetlen a viselkedési dimenzió bizonyítékainak rögzítése a pénzügyi műveltség mérőszámán belül (OECD, 2013). Kutatások kimutatták, hogy a helyes pénzügyi magatartással rendelkező egyének nagyobb valószínűséggel vesznek részt tőzsdén és a pénzügyi piacokon (van Rooij et al., 2007;Klapper et al., 2012;Koenen et al., 2016), ezek a személyek továbbá: aktív megtakarítással rendelkeznek (Atkinson-Messy, 2012;Klapper et al., 2012;Agarwalla et al., 2013), időben fizetik számláikat (Atkinson-Messy, 2012;Agarwalla et al., 2013), felmérik a pénzügyi termékek teljes körét (Atkinson-Messy, 2012;Agarwalla et al., 2013), válság idején előnyben részesítik a megtakarításokat a hitelfelvételekkel szemben (Atkinson-Messy, 2012;Agarwalla et al., 2013), átgondolják a termékek megfizethetőségét (Atkinson-Messy, 2012;Agarwalla et al., 2013), megtervezik a nyugdíjukat (Lusardi-Mitchell, 2008, 2011van Rooij et al., 2009;Herd et al., 2012), jól kezelik a vagyont (van Rooij et al., 2007(van Rooij et al., , 2008Herd et al., 2012), előnyben részesítik az alacsony költségű hitelfelvételt (Lusardi-Tufano, 2009;Huston, 2012;Allgood-Walstad, 2013), megtervezik és figyelemmel kísérik a háztartásuk költségvetését és a személyes pénzügyieket (Lusardi-Tufano, 2009;Remund, 2010;Atkinson-Messy, 2012;Agarwalla et al., 2013), bankszámlával rendelkeznek (Klapper et al., 2012), megfelelő pénzügyi döntések hoznak (Remund, 2010;Koenen et al., 2016). Lusardi és Tufano (2009) szerint, az Egyesült Államok lakosságának csak 1/3-a tudja alkalmazni a kamatos kamat fogalmát valós élethelyzetekben. ...
A pénzügyi műveltség manapság, de legfőképp a 2008-as gazdasági válság óta népszerű téma mind a szakirodalomban, mind pedig a mindennapi életben. Ebben a cikkben a pénzügyi műveltséggel kapcsolatos általános szakirodalom áttekintése történik, a pénzügyi műveltség három dimenziójára fókuszálva. Bemutatásra kerül a pénzügyi ismeretek, pénzügyi attitűd és pénzügyi magatartás kapcsolata, valamint a pénzügyi műveltség hiánya okozta problémákra is kitérek. A tanulmány célja egyrészt, hogy bemutassa a PISA 2018-as pénzügyi műveltséget érintő kutatás általános eredményeit, valamint a kutatás Szerbiára vonatkozó része kerül mélyebb elemzésre. A tanulmány célja továbbá, hogy bemutassa, hogy Szerbia, mint délkelet-európai ország a felmérés alapján, melyik helyen áll (a kutatásban résztvevő fiatalok elsősorban matematikai teljesítményük, valamint általános pénzügyi műveltségük alapján). A tanulmányban a fókusz a fiatalokon van, hiszen fontos, hogy a pénzügyi műveltség fejlesztése már fiatal korban elkezdődjön. A tanulmány módszertanát tekintve szakirodalomelemzés, dokumentumelemzés, illetve a PISA felmérés adatsorainak másodlagos elemzésére került sor. Végül bemutatásra kerülnek a lehetséges jövőbeli kutatás irányai is.
... On the contrary, Courchane 2005, concluded that education is not significant in determining financial literacy levels. Same conclusions were made from a survey by Lusardi and Mitchell (2008) who observed that some people with low levels of education scored high on financial questions and this showed that even those with little education can be financially literate. Given that Zimbabwe commands a high literacy levels in Africa (at 90.1%) analysing the effect education on financial literacy becomes paramount. ...
... Inherited gender imbalances in terms of education, income and employment opportunities, affect financial literacy to a large extent. In a research by Lusardi &Mitchell 2008 andBernheim 2009, gender was found to significantly determine the levels of financial literacy. They discovered that men are more financially knowledgeable compared to women, other things held constant. ...
... In the United States, women outnumber men as a function of increasing age to the extent that the ratio of women-to-men is 2-to-1 by the age of 85 (United States Census Bureau, 2010). Consequently, a general absence of retirement planning among women (Lusardi & Mitchell, 2008) seems particularly problematic. Aside from such age-related challenges, women are more likely to experience several other life difficulties associated with financial complications: About 10 million single women are raising at least one child, which repre-sents a 52% increase since 1970 (United States Census Bureau, 2011). ...
... Despite women's risk of having insufficient retirement assets and of living at or below poverty (Lusardi & Mitchell, 2008;United States Census Bureau, 2012), only 27% of the women in this nationally representative study have sought investment advice during the last five years. Additionally, only a little more than a third have a rainy day fund sufficient to cover at least three months of living expenses. ...
Women in the United States face numerous financial challenges: They typically earn less than men do; they have greater probabilities of living in poverty; and they need substantial retirement funds, given their average longevity. Consequently, a comprehensive understanding of how women use investment advice to remedy these challenges is vital. However, the literature is largely mute on this issue. This study helps to fill this gap in the literature by evaluating two profiles of female investors through cluster analysis and logistic regression conducted on a large, nationally representative database collected recently. Predictors of seeking investment advice vary considerably across profiles.
... A gendered consideration of FL highlights several implications for women specifically. First, existing research across different contexts highlights that, women financial knowledge about debt literacy, confidence, enthusiasm, and even willingness to learn than men (Atkinson et al., 2006;Borden et al., 2008;Lusardi and Mitchell, 2008;Lusardi, 2008;Lusardi and Tufano, 2015;Nițoi et al., 2022;Khan and Surisetti, 2022). Second, women's financial autonomy and decision-making freedom may be constrained by a range of socio-institutional factors. ...
... Second, women's financial autonomy and decision-making freedom may be constrained by a range of socio-institutional factors. For example, in patriarchal societies (Filipiak and Walle, 2015;Zhao and Wry, 2016) gendered task allocation may result in male partners specialising in financial decisions while women take on household responsibilities (Fonseca et al., 2012) thereby reducing women's overall FL while increasing their financial risk (Lusardi and Mitchell, 2008). ...
... We'll look at a variety of philosophical and practical definitions of financial literacy below. Financial literacy has been described as financial knowledge (Hilgert, Hogarth & Beverly, 2003) describe financial literacy as financial knowledge; Lusardi and Mitchell (2008) add that it also entails understanding the most fundamental economic concepts required to conduct financial decisions wisely. According to Lusardi (2008), this fundamental understanding includes how interest compounding works, the fundamentals of diversification of risk, and the distinction amongst real and nominal values. ...
... Financial literacy has been described as financial knowledge (Hilgert, Hogarth & Beverly, 2003) describe financial literacy as financial knowledge; Lusardi and Mitchell (2008) add that it also entails understanding the most fundamental economic concepts required to conduct financial decisions wisely. According to Lusardi (2008), this fundamental understanding includes how interest compounding works, the fundamentals of diversification of risk, and the distinction amongst real and nominal values. These knowledge-based conceptualizations have been contrasted by people who think it is an ability or a skill. ...
This study investigates how behavioral biases affect how individual investors make investing decisions. Drawing upon the discipline of behavioral finance, which integrates psychological insights into financial decision-making, we investigate the presence and effects of various biases on investment behavior. The study aims to contribute to understand the factors thoroughly that shape individuals' investment choices and their subsequent financial outcomes. Using a mixed-methods approach, including surveys and interviews, we explore the prevalence and magnitude of biases for instance loss aversion, overconfidence, and framing effects among individual investors. By analyzing real-world investment decisions, we assess the influence of these biases on portfolio composition, trading frequency, and performance outcomes. According to the preliminary findings, behavioral biases play a significant role in shaping investment decisions. Overconfident investors prefer to trade more often, leading to higher transaction costs and lower returns. Loss aversion biases lead to suboptimal portfolio allocation, as investors disproportionately allocate funds to low-risk assets. Additionally, framing effects impact decision-making by altering risk perceptions and preferences. The study underscores the importance of recognizing and mitigating behavioral biases in investment decision-making. By raising awareness and providing insights into the specific biases influencing individual investors, this research offers valuable implications for financial education, regulatory policies, and investment advisory services. Ultimately, understanding the role of behavioral biases can contribute to more informed and rational investment decision-making, leading to improved financial outcomes for individual investors.
... Karakteristik psikologi perempuan dianggap lebih memahami keuangan karena memiliki ketelitian dan ketelatenan serta kemampuan berhitung yang baik (Narsa, 2007). Namun, temuan beberapa studi juga menunjukkan bahwa tingkat literasi keuangan kaum perempuan cenderung lebih rendah dibanding laki-laki (Driva, Lührmann, & Winter, 2016;Lusardi & Mitchell, 2008). Hal tersebut menggambarkan bahwa ada fenomena kontradiksi terkait stereotip gender dalam pengelolaan keuangan. ...
... Adanya gender streotyping yang lebih cenderung memperlihatkan bahwa laki-laki lebih berpeluang memperoleh inklusi finansial dibanding perempuan di antara para pelaku usaha UMKM. Temuan ini juga memperkuat pandangan beberapa peneliti bahwa tingkat literasi kaum laki-laki lebih tinggi dibanding perempuan (Driva, Lührmann, & Winter, 2016;Lusardi & Mitchell, 2008). Hasil ini makin menunjukkan bahwa pengetahuan dan literasi finansial laki-laki lebih dominan meningkatkan terciptanya inklusi keuangan. ...
MSMEs as an economic sector which very vulnerable to financial problems and are dominated by home industries that are attributable to gender stereotypes in their management. Consequently, the dynamics of its management become quite complex in enhancing their marketing capabilities. The purpose of this study to investigate the impact of financial literacy, gender differences, and financial inclusion on leveraging the marketing capabilities of MSMEs. Collecting data using a survey questionnaire on 168 MSMEs in Gorontalo City with a merge of accidental and snowball sampling techniques. Data analysis using binary logistic regression. The results reveal that the existence of financial knowledge has a significant impact on the creation of financial inclusion in micro, small and medium enterprises. Furthermore, there are different patterns for women and men in obtaining access to credit. The role of gender differences in men who are more likely to access inclusive financial services than women. On the other hand, the creation of financial inclusion further enhances the marketing capabilities of MSMEs.
... Family wellbeing: It has been observed that household resources in women's hands has been observed to be more likely spent on improving family well-being, particularly that of children. Lusardi A. (2006) [1] conducted a study on Planning and Financial Literacy: How Do women Fare? Study found that women had little financial literacy, retirement calculation was not an easy task particularly for women and they are much more rely on family, friends and advisers for their financial planning. ...
... Family wellbeing: It has been observed that household resources in women's hands has been observed to be more likely spent on improving family well-being, particularly that of children. Lusardi A. (2006) [1] conducted a study on Planning and Financial Literacy: How Do women Fare? Study found that women had little financial literacy, retirement calculation was not an easy task particularly for women and they are much more rely on family, friends and advisers for their financial planning. ...
... One aspect of gender inequality that has received less attention from researchers and policymakers concerns the issue of financial literacy; this topic has become quite popular in recent years, especially in the wake of the past global financial crisis, which had far-reaching economic consequences (Lusardi and Mitchell 2014;Mitchell 2017), and has proven to be a mechanism for reducing inequalities and improving women's financial behavior, agency, and empowerment (Lusardi, Michaud, and Mitchell 2017;Cupák, Fessler, and Schneebaum 2021;Tinghög et al. 2021). Annamaria Lusardi and Olivia S. Mitchell (2008 were among the first to attempt to estimate the extent of financial literacy, in particular in developed countries, focusing their attention on three aspects of financial literacy: the notions of compound interest, inflation rates, and risk diversification. These authors have highlighted that "few people across countries can correctly answer three basic financial literacy questions" related to those aspects (Lusardi and Mitchell 2014: 13); Annamaria Lusardi (2019) also explained why financial education is so important. ...
Understanding why women are less financially literate than men is crucial for developing effective policies that decrease gender inequalities and improve women’s financial literacy, agency, and empowerment. Accordingly, this article adopts a multidimensional approach to measuring financial literacy in developing countries, aggregating three key components of financial literacy, namely financial behavior, financial attitude, and financial knowledge. Using data from Argentina, Chile, and Paraguay, the study finds that there are statistically significant gender differences in these countries, which is confirmed, except in the case of Chile, by an extensive econometric analysis. In turn, a traditional Oaxaca–Blinder decomposition indicates, when considering the three countries as a whole, that 56 percent of the gap can be attributed to unexplained factors, while 44 percent to differences in observable characteristics, implying that men’s rates of return on human capital components, in a broad sense, are significantly different from those experienced by women.
... Financial literacy has been associated with a wide array of economic outcomes such as debt management, wealth accumulation, financial vulnerability, and a host of other economic outcomes in the United States and other countries (Lusardi, 2008(Lusardi, , 2012(Lusardi, , 2019Lusardi & Tufano, 2009, 2015Lusardi, Mitchell, & Curto, 2014;van Rooij, Lusardi, & Alessie, 2011). In these studies, literacy is measured by the number of correct responses to a set of survey questions, with by far the most widely accepted being the standard set developed as the Lusardi-Mitchell "e" or the "Big 5" Lusardi & Mitchell, 2008). Other work has extended these standard questions (e.g., Lin et al., 2019;Lusardi, 2008), while other approaches to measurement of financial literacy are surveyed in Elan (2011). ...
We develop a measure of mutual fund investment knowledge that complements existing fi- nancial literacy measures. Our question battery was administered to 3,444 survey respondents. We validate the index with factor analysis identifying two latent components, and descriptive regressions demonstrating the additive value of our index beyond general financial literacy in explaining variation in financial well-being, investment ownership, and fee calculation profi- ciency. Despite mutual funds’ importance in household savings, our index suggests that the public lacks adequate understanding of them. We demonstrate the utility of our index for studying selected decision and policy problems.
... For example, Hayhoe et al. (2000) found that gender was more influential in predicting financial management practices than was affective credit attitude, with female students employing a greater number of financial practices. Gender differences have also been demonstrated for objective financial knowledge and numeric ability, where males typically perform better than females (Chen & Volpe, 2002;Fonseca et al., 2012;Lusardi & Mitchell, 2008;Powell & Ansic, 1997). Lind et al. (2020) attempted to explore how gender impacted broader measures of financial behavior while controlling for differences in relevant cognitive abilities and demographic statistics-their research discovered that women reported a lower level of subjective financial wellbeing even though they reported a more prudent financial behavior than men when controlling for socio-demographics and cognitive abilities. ...
This study uses 2013 Survey of Consumer Finances data to explore the impact of financial tech- nologies on households’ positive financial behaviors. After controlling for variables on general capi- tals, financial literacy capitals, and financial resources, we find that only planning technologies (e.g., direct deposit and computer software) are positively related to households’ engagement in positive financial behaviors. In contrast, the impact of transaction technologies (e.g., using ATM card, credit card, phone banking, and computer banking) is negative. Policymakers and financial service pro- viders should assist consumers with better financial tools and help them manage financial resources and behaviors.
... Peeters and De Tavernier (2015) explain the enduring financial vulnerability of women based on the interactions between work history, family history and pension regulations. Nevertheless, also the ability and the skills to proactively plan for the own retirement acquire a particular relevance in the new retirement income provision paradigm, where individuals' forward-looking behaviour (with respect to investments, savings and annuitization) is given a more prominent role (OECD 2018;Lusardi and Mitchell 2008;Kalmi and Ruuskanen 2018). Such decisions reverberate their effects in the long term and are crucially affected by the understanding of complex risks, such as financial and longevity risks. ...
We investigate the ability of the Lee–Carter model to effectively estimate the gender gap ratio (GGR), the ratio between the male death rates over the female ones, by using a Cox–Ingersoll–Ross (CIR) process to provide a stochastic representation of the fitting errors. The novelty consists in the fact that we use the parameters characterizing the CIR process itself (long-term mean and volatility), in their intrinsic meanings, as quantitative measures of the long-term fitting attitude of the Lee–Carter model and synthetic indicators of the overall risk of this model. The analysis encompasses 25 European countries, to provide evidence-based indications about the goodness of fit of the Lee–Carter model in describing the GGR evolution. We highlight some stylized facts, namely systematic evidence about the fitting bias and the risk of the model across ages and countries. Furthermore, we perform a functional cluster analysis, allowing to capture similarities in the fitting performance of the Lee–Carter model among countries.
... These results are statistically significant. These findings underscore sex differences in financial literacy reported in other studies as well (Lusardi and Mitchell 2008;Lusardi et al. 2010). We also observe that correct answers increase in all three questions as the education level rises. ...
In this paper, we provide an analysis of financial literacy in Peru and Uruguay. We find that the knowledge of simple concepts at the basis of financial decision-making is low in both countries. Not only is financial illiteracy widespread, but it is particularly acute among women, rural populations, the less educated, low-income people, the self-employed, the not employed, younger people (in the case of Peru), and older people (in the case of Uruguay). We also find that financial literacy is linked to measures of financial wellbeing: those who are financially literate are more likely to be able to save and plan for retirement in both countries. In addition, we find a relationship between knowledge of specific concepts and key financial behaviors. Lastly, we find a relationship between financial literacy and financial resilience
... Consumer financial decision-making reflects their financial knowledge, and inadequate financial literacy can lead to irrational investments, improper financial planning, impulsive consumption, and also their opinions about the existence of credit cards. Low levels of financial literacy have a negative impact on the ability to save and plan for retirement (Lusardi & Mitchell, 2008). Additionally, Howlett et al. (2008) confirmed that financial knowledge can influence consumer retirement savings and investment planning, which has significant long-term benefits. ...
This research aims to evaluate the public's response to the global development of credit cards using primary data from Twitter tweets between January 1, 2019, and March 28, 2023. The research method employed is a qualitative approach using Python Library software called VADER (Valence Aware Dictionary and Sentiment Reasoner) to classify sentiments in these tweets. The research results indicate that the majority of the public has a neutral sentiment, accounting for approximately 97.6% towards credit cards, while positive sentiment reaches 1.7%, and negative sentiment is approximately 0.7%. Some keywords frequently appearing in the tweets include credit card, card needed, ASTRA Coins, card debt, and mobile users. It is expected that this research on public sentiment can assist relevant stakeholders in taking appropriate steps to enhance credit card usage and increase awareness and support for it. We also analyze the shariah perspective on credit card.
... While the psychological factors represent proximal influences that have a direct effect on savings decisions; demographic factors are the distal influences that lead individuals to think about saving in predictable ways (Hershey, 2004). Similarly, other empirical studies have shown that financial literacy, such as understanding financial concepts and decisions, has an impact on retirement planning in the United States and Sweden (Lusardi & Mitchell, 2008;Hauff et al., 2020). Moreover, having a clear retirement objective significantly influences financial planning and the propensity to save in the United States (Stawski et al., 2007). ...
... (Van Rooij et al., 2011). In the same context (Lusardi & Mitchell, 2008) indicated that many people are unfamiliar with basic financial principles. Owing to their lack of investment expertise, people are less likely to make wise financial decisions (Chen & Volpe, 1998). ...
... 51%. We also find that Female is associated with a 52% decline in the probability of answering more financial literacy questions correctly which is consistent with Lusardi and Mitchell (2008) that find females have lower levels of financial literacy. Black (Non-Hispanic) is associated with a 36% decline in the probability of answering more financial literacy questions correctly. ...
Using the 2012 National Financial Capability Study we determine what demographic characteristics are associated with individuals that use financial advisers and whether financial advisers have any impact on the financial literacy of their clients. We consider five types of financial advisers: Debt Counselors, Savings or Investment, Mortgage or Loan, Insurance, and Tax Planning. We find a significant increase in the use of financial advisers over the past decade. We also find that Savings or Investments advisers have the largest positive impact on the financial literacy of their clients, followed by Mortgage or Loan and Insurance advisers, even when controlling for financial education and potential endogeneity issues.
... However, for the complex disclosure, men are 8% more likely to correctly compute the fee than were women. Other studies show that women tend to have lower financial literacy than men (Lusardi and Mitchell, 2008). ...
This article develops a measure of complexity of fee disclosures, based on previous work assessing the grade level of language, and validates that measure through a survey where students are asked to independently rate the complexity of fee disclosures. In addition, the article hypothesizes that high fee providers are more likely to engage in strategic complexity in fee disclosures than are low fee providers. We hypothesize that high fee providers use strategic complexity to take advantage of the lack of financial sophistication of many people, making it difficult for them to compare fees across service providers and to understand the level of fees they are paying.
... FinLit1 is determined by the answers to four questions which have been broadly used in the literature and cover knowledge about the effects of compound interest, inflation, and diversification (the so-called Big Three, e.g., Lusardi and Mitchell 2008, 2011 ...
Our study contributes to a better understanding of the relationship between financial literacy and households’ investments in risky assets. We estimate a structural equation model with data from the Panel on Household Finances of the German central bank. Our results show that although households’ net wealth is the dominant driver of investments in risky assets, financial literacy plays a remarkable role. Financial literacy has an indirectly positive influence on participation in the financial market. The higher the financial literacy, the lower is the risk aversion. The lower the risk aversion, the higher is the participation in the financial market.
... Age, income, gender, education (Chen and Volpe, 1998;Al Tamimi, 2006;Agarwalla, et al., 2015;Bashir et al., 2013;Kiliyanni and Sivaraman, 2016;Margaretha and Sari, 2015;Van Rooij et al., 2007), work experience (Chen and Volpe, 1998;Kiliyanni and Sivaraman, 2016) previous online trading experience (Al Tamimi, 2006) nationality, race, academic discipline (Chen and Volpe, 1998) Investigate the difference source of information (Mirshekary and Saudagaran, 2005) marital status (Agarwalla et al., 2015;Bashir et al., 2013;Kiliyanni and Sivaraman, 2016;Nababan and Sadalia, 2012;Margaretha and Sari, 2015), financial decision-making process, budgeting and expenditure (Agarwalla et al, 2015), religiosity (Bashir et al., 2013;Kiliyanni and Sivaraman, 2016), financial satisfaction, Retirement plan intention parent's education and parent's occupation (Kiliyanni and Sivaraman, 2016;Margaretha and Sari, 2015) influences financial literacy. Numerous research, such as those by Nga et al. (2010), Baluja (2016), Lusardi (2008), and Bhabha et al. (2014), have shown that men are more financially knowledgeable than women are. Contrary to this, Bashir et al. (2013), found that women were more reluctant to take investment-related risks when compared to men. ...
... Tis study used quantitative and qualitative methods to analyze its fndings, and it concluded that technology could be a valuable tool for raising fnancial literacy awareness among an economy's investors. Te study revealed a substantial correlation between fnancial literacy and its impact on men's and women's investment decisions [19]. Trough a feld investigation, the study focused on the importance of human decisions and their impact on fnancial information [20]. ...
The significance of financial literacy is increasing faster in today’s world. Financial literacy provides individuals with necessary and adequate financial knowledge and makes them professionally aware of managing their finances. It plays a vital role in the economic development of an economy. The study examines the impact of financial literacy on investors’ financial decisions, financial planning, selection of financial products, and financial literacy awareness program and its influence on investors’ investment decisions. In order to obtain information from the respondents, we employed a questionnaire that was both structured and self-administered. The investigation analyzes the survey responses from 360 respondents in Saudi Arabia. Various statistical methods such as descriptive statistics, correlation analysis, analysis of reliability, analysis of variance (ANOVA), and regression analysis were utilized to evaluate the data obtained. The results obtained in the study indicated that financial literacy has a significant impact on investors’ financial decisions, financial planning, and the selection of financial products that influence investors’ investment decisions. The research also found that financial literacy is affected by financial literacy awareness programs, which have a favorable influence on the investment decisions made by investors. The study’s findings will help prospective investors understand the importance of raising financial knowledge for their future financial goals.
... While such umbrella policies reach a large group and spread the cost of implementation among them, they may neglect certain groups with specific characteristics and needs. For instance, a one size fits all approach to financial literacy is futile and initiatives need to be tailored to specific target groups (see Lusardi, 2019;Lusardi and Mitchell, 2008). MSMEs, rural communities and women have different needs and face different barriers. ...
Available at: https://www.unescap.org/kp/2023/policy-approaches-financial-inclusion-examination-approaches-across-asia-and-pacific-and
... Women are not performing well in taking right financial decisions (Devi, 2016). Historically, low financial literacy has had a significantly greater impact on women than men (Lusardi & Mitchell, 2008). The OECD (2013) define "Financial literacy is a combination awareness, knowledge, skill, attitude and behaviour of individual that are required to make good financial decision and to achieve individual financial wellbeing." ...
Financial literacy among women in India has been a topic of concern for many years, given the gender gap in financial inclusion and the lack of access to financial services for women. In present study, authors have presented an association of financial knowledge, financial behaviour, financial attitude, need for financial training and demographic factors towards the financial literacy level among working women in Pune, India. The sample size of 105 working women has been incorporated for the research. A structured questionnaire designed on a 5-point Likert scale has been used based on convenience and snowball sampling. The result of the analysis revealed that even if the women are earning well, this does not translate into them being financial decision makers. It was also found that financial knowledge does not reflect into any improvement in their financial attitude.KeywordsFinancial literacyFinancial knowledgeFinancial attitudeFinancial inclusionFinancial decision-making
... Since "I don't know" was not an available answer, it is assumed that a quarter of survey participants did not know enough about the subject to even guess. This result is consistent with Lusardi and Mitchell (2008). A targeted financial curriculum for this segment of the population should include basic information on life insurance products. ...
The research reported here assessed the financial literacy of older adults living in rural communities, current use of and attitudes towards debt, and debt pressures. Those surveyed exhibit low credit card usage and responsible payment practices. Most never use credit to pay medical expenses. Respondents display a financial literacy level similar to the Jump$tart Coalition's 2008 college sample. While the financial situations and well-being for most are positive, those with financial pressures face some negative outcomes. Increasing financial literacy and teaching basic budgeting to a targeted segment of older adults have the potential to increase well-being and family relationships.
... The study also showed that 67% of the adult population was financially illiterate, highlighting the role of financial illiteracy in the increased rate of financial crimes after the pandemic. Lusardi and Mitchell (2008) developed a set of questions to measure an individual's level of financial literacy, focusing on numeracy and the calculation of interest rates, understanding inflationary trends, and comprehending risk diversification. Atkinson and Messy (2012) suggested that the assessment of financial literacy should focus on only three dimensions, as this approach is justified and widely employed in existing literature. ...
This study aims to explore the connection between financial illiteracy and financial crimes. Quantitative data analysis was conducted to determine whether there is a relationship between the two variables. A questionnaire was selected for data collection, the questionnaire is divided into 21 questions and segmented into different parts. The study found that 41.2% of the audience were able to distinguish between money and finance, 88.2% of the audience were banked, 45.1% felt comfortable and confident in their financial knowledge, 41.2% of the audience acknowledged the role of financial institutions in combating financial crimes and promoting financial literacy, and 60% of the audience identified a connection between financial literacy and financial crimes. The results obtained from quantitative data analysis indicate the need for further study, as certain aspects of financial literacy and their relationship with financial crimes require more attention. The study results will contribute to the understanding of the importance of financial education and its impact on reducing financial crimes.
... Research reveals that males and females differ in their financial decisions on the basis of confidence in their investments, risk appetites and financial knowledge (Glenzer et al., 2014) Dickason-Koekemoer (2019) in their study revealed that men and women differ on the basis of financial wellbeing. Literature also documents that males are more knowledgeable then females (Lusardi and Mitchell, 2008;Hira and Loibl, 2008) and possess higher levels of confidence in their decisions as compared to females (Graham et al., 2002) thus making more stable and consistent investment decisions (Bucher-Koenen and Lusardi, 2011). Thus, in order to test and to add in the literature, this study posits gender as a moderator in the proposed conceptual model as depicted in Figure 1. ...
Purpose
Stock markets are considered as the largest and most important units for the development and growth of the economy. The present study attempts to provide a comprehensive view of factors influencing investment decision making process of stock market investors. A multi group analysis of gender is also carried out on the proposed model.
Design/methodology/approach
The data of 402 valid responses are collected through structured questionnaires from individual investors of North India. SPSS 23 is used to do the descriptive analysis and AMOS 22 is used to establish the validity of the constructs and for hypotheses testing. For performing multi group analysis, several invariance tests have also been conducted to check the robustness of the model.
Findings
The results reveal that all the factors such as firm image, accounting information, neutral information, advocate recommendation and personal financial needs significantly influence investment decision making concluding image of the firm being the most influential factor and advocate recommendation being the least influential factor for investment decisions. No significant differences between males and females were found.
Research limitations/implications
The current study suffers from the limitation of restricted geographical area of North India. Moreover, there is also a scope to incorporate more demographic factors for predicting investment decisions.
Originality/value
This study incorporates a range of factors which covers all the aspects of investment decision making. This study also highlights the notion of signaling theory, thus contributing to the limited literature in Indian context.
... Figur 2.14: Fordeling av antall rette svar på 50 finansspørsmål for henholdsvis kvinner (rosa + lilla) og menn (blå + lilla) (2018-undersøkelsen) 18 Kvinners større tendens til å svare «vet ikke» En av grunnene til at kvinner får lavere kunnskapsscore enn menn, er at de svarer «vet ikke» mye oftere enn menn. Denne større tendensen til å svare «vet ikke» blant kvinner er også funnet i internasjonale undersøkelser av finansiell kunnskap (Lusardi & Mitchell, 2008). ...
https://uia.brage.unit.no/uia-xmlui/handle/11250/3076629
... According to the OECD (2013), a connection between individual financial decisions, society, and environment could constitute a vital element of the definition of financial education. Lusardi and Mitchell (2008) argue that the goal of financial education programs should go beyond addressing the individual financial well-being of participants and include addressing societal issues like environmental risks, sustainability, and gender equality given the differences in financial literacy and decision-making ability between men and women. Although integration of these elements in financial education programs is still in its early stages, the Federal Office for the Environment (2020) emphasizes how important they are for handling the rising environmental risk. ...
Introduction. Financial literacy has been recognized worldwide as a significant element of stability and economic and financial growth. With the evolution of financial instruments, the growing importance of financial inclusion, its correlation with financial literacy, and the effects they have on sustainability, the concept of financial literacy is dramatically changing and getting more inclusive, spreading the focus on sustainability, sustainable consumption, and environmental preservation. Aim and tasks. The aim of the study is to examine the connection between the population's financial literacy level and greenhouse gas emissions. The working hypothesis claims that there is a relationship between financial literacy and the carbon footprint. Results. The correlation and regression analyses were the main tools in the study, while the dataset for 2014 covered 137 countries, with the main dependent variables being carbon emissions per capita, per unit of gross domestic product, and per unit of energy. The partial correlation coefficients between financial literacy rating and carbon footprint variables were insignificant when controlled for economic development, represented by per capita gross domestic product. Estimated econometric models with financial literacy in quadratic form were adequate and showed a significant connection between financial literacy and carbon emissions per capita and per gross domestic product at the 5% level. The relationship with carbon emissions per unit of energy was significant at the 10% level. In all three models, the relationships followed an inverse U-shape, with low financial literacy increasing the carbon footprint and higher financial literacy decreasing it. The turning numbers for financial literacy were 35.8% for carbon emissions per capita, 41.4% for emissions per unit of gross domestic product, and 32.4% for emissions per unit of energy. Conclusions. Financial literacy was indeed associated with carbon emissions in a complex, non-linear way. The effect of energy consumption on carbon emissions was stronger than financial literacy and appeared to be the driving force for the increase in carbon emissions. With low financial literacy observed in underdeveloped countries, the situation was not favorable for the environment. As financial literacy increased, welfare, income, and consumption increased too, leading to an increase in greenhouse gas emissions, i.e., a bigger CO2 footprint. Once a certain stage of economic development was reached, the relationship was reversed, i.e., in developed countries, financial literacy worked towards reducing the carbon footprint and protecting the environment.
... Derivado de las crisis económicas internacionales la educación financiera se ha vuelto un tema recurrente en la agenda de las organizaciones mundiales, poseerla permite que se tomen mejores decisiones y se prevea un futuro sin incertidumbre económica. De manera general se establece que un individuo bien informado destinará una cantidad de sus recursos en ahorrar, ello con el fin de sufragar emergencias o gastos cuando sus ingresos bajen o caigan (Lusardi y Mitchell, 2014). ...
La educación financiera se ha convertido en un elemento diferenciador en el desarrollo económico de los países y México ha tomado medidas que no han sido suficientes. Esta investigación tiene el objetivo de identificar qué factores influyen en el nivel de educación financiera de los jóvenes pertenecientes a la generación Z en el municipio de Celaya, Guanajuato, México. Con un enfoque cuantitativo, de diseño no experimental y alcance correlacional. Los resultados muestran que los jóvenes no cuentan con los conocimientos necesarios para tomar buenas decisiones financieras, además, que el nivel educativo de la madre influye en el nivel que poseen estos jóvenes. Se recomienda que se ajusten los planes y programas de estudio para que se impartan materias relativas al tema desde la educación básica. Una limitación del presente fue la recolección de los datos que se realizó mediante encuestas en línea debido a las condiciones actuales de pandemia. Se concluye se debe fortalecer la competencia financiera, sobre todo enfocada en las prácticas o comportamientos financieros positivos.
... In line with previous literature which showed that men have a stronger tendency to purchase pension savings-related investment products than women (Agnew et al., 2008), in our sample those who worry about and plan for their retirement are significantly more likely to be men. This is also in line with Lusardi and Mitchell (2008), who show that the majority of women undertake no retirement planning. ...
We examine whether an individual's inability to save in the last 12 months affects the extent to which they are concerned about their future financial security and their propensity to plan for retirement. We use an original survey based upon representative samples of working individuals in 16 countries. We show that individuals who were unable to save over the 12-month period prior to the survey are less likely to consider well-being in retirement as their major financial concern. They are also less likely to invest in supplementary pension funds than those who were able to accumulate savings. We provide evidence that these findings are robust under several specifications and are mediated by respondents' perceived income prospects and assessment of their current financial situations.
... Such clustering was madeon the basis of total paddy yieldof each of the districtsas per the last available district level yield. The data on district level paddy yieldwas collected from the last agricultural survey carried out in 2016 by the Government of West Bengal which closely matches with the FL related data of 2017 used in the study 1 .FL of the farmers wasascertained using Big 5 FL questions on numerical ability, compounding, inflation, and risk diversification as proposed by Lusardi and Mitchell (2008). Use of the Big 5 questions in assessing the FL is very popular amongst the researchers across the globe.Each farmer gets one mark for each of the right answers to the Big 5 FL questionnaire. ...
The article intends to evaluate the Financial Literacy (FL) of farmers and its determinants in the context of West Bengal, India. Data on 672 farmers were gathered from Financial Inclusion Insight database (5 th round). Appropriate statistical tools and techniques were used to address the objectives of the study. Results showed that the level of FL of the farmers of West Bengal was poor. Farmer'sFL score in West Bengal was noticed to be only 39.75%. The mean FL score of farmers from the agriculturally advanced districts (43.20%) was found to be greater as compared to the farmers from the agriculturally backward districts (36.29%). Assessment of the determinants of such FL suggests that gender, educational attainment, financial inclusion, and agricultural prosperity of the district significantly explain the FL level of farmers of West Bengal.
Financial education is part of the approach for mitigating the effects of unanticipated financial problems. Financial education is important not only for businesses, but also for households and individuals. However, research concentrating on financial education are scarce as compared to financial planning in practice, such as investment, retirement or saving references. Financial education is, ideally, a prerequisite for financial planning skill. In our scenario, for example, residents in Ngipik village are illiterate and admit to lacking financial literacy knowledge. As a result, this article seeks to assess the effectiveness of a month-long financial education program aimed primarily at children, youth, and society in general. The results show that 72% of the targeted objects are satisfied with the programs and that they are successful in improving their financial literacy, particularly financial planning. This program, however, did not teach them using an algorithm that can recommend the ideal composition of assets gathered in order to preserve their life sustainability.
The present study is intended to establish the relationship between the retirement saving behavior and the various factors affecting the retirement. A total of 1006 retired employees in the age group of 60 to 70 years participated in this study. The main aim of this study to analyze the retirement benefits and retirement saving behavior among men and women retirees. This study is an attempt to analyze the retirement saving behavior of the retirees and the preference of the individuals to achieve those retirement planning objectives. The present study revealed that individual's retirement behavior is related to perceived retirement benefits. The importance of post retirement education is very essential. However, stress is also placed upon the need for pre retirement education, which will significantly alter the pre-conceptions of and attitudes towards retirement. The findings of this study have implications for the employees who are approaching to retirement that will enable them to do early planning for retirement and help them to make strong financial base for their post-retirement life. Pre and post retirement education is emphasized by this research.
This article explores how financial education, financial experience, and parents’ financial experi- ence influence young adults’ financial knowledge. We rely on a general model of learning to hypothesize the determinants of financial knowledge acquisition. Using data on 3,597 young adults from a national longitudinal survey, we find that financial education, financial experience, and parents’ financial experience all exert a positive impact on young adults’ financial knowledge. Moreover, these determinants work interactively. Both individual and parents’ financial experience help narrow the gap in financial knowledge caused by lack of financial education.
Generally, there is still limited research, if any, which aims to identify and analyze determinants of the capital intensity of firms in Vietnam, including SMEs. Considering this research gap, this paper focuses on identifying various determinants of SMEs’ capital intensity across different industries in Vietnam. The influence level of different determinants, such as firm size, firm age, managers’ gender, and education, will also be evaluated using the Bayesian statistics method. The result findings show that: bigger firms in terms of the total labor force have lower capital intensity ratios; firms with larger liability have higher capital intensity ratios; older firms have higher capital intensity ratios; SMEs with male managers have higher capital intensity ratios. Additionally, firms with university-educated managers and vocational trained managers will have a lower capital intensity ratio than those with not formally educated managers. It is highly recommended that SMEs’ managers invest more in standardizing operation processes, quality management systems, and training programs along with expanding business activities. Additionally, firms should continually innovate their working process and apply advanced technology to adapt to rapid environmental changes and compete with their rivals.
Students are essential to the development of nearly every economy. They are the future entrepreneurs and economic drivers. Individual and community financial well-being are profoundly impacted by financial literacy. Consequently, financial literacy is a crucial idea for college students who are just beginning to manage their financial responsibilities and habits. Therefore, college-level financial education and training would instil financial confidence in future leaders, helping them to make prudent financial judgments. This research aims to identify and evaluate the multiple elements that influence college students' financial literacy. According to data collected from 230 students, financial literacy is influenced by financial knowledge, use of financial services, financial authority in decision-making, and financial planning. The results of the study indicate that enhancing college students' financial literacy requires time and effort.
In today's increasingly digital world, financial literacy has become more important than ever before. With the rise of online banking, mobile payments, and cryptocurrencies, it is crucial for individuals to have a basic understanding of financial concepts and tools to make informed decisions about their money. This paper attempts to study digital financial literacy on the components of digital financial services knowledge, awareness and risk control using primary data collected from 265 millennials of five cities of India. Findings revealed that there is a noteworthy difference found between digital financial services knowledge, awareness and risk control based on millennials" city of residence. Results also revealed the relationship between digital financial literacy components. Findings showcased that the importance of digital financial literacy cannot be overstated. With the increasing use of digital financial tools, individuals who lack financial literacy are at risk of falling victim to financial scams, making poor financial decisions, and failing to take advantage of opportunities to grow their wealth.
People are currently facing high unemployment rates, and one of the main causes is financial literacy. Financial literacy is critically important for people as it enables them to effectively manage their money and decide whether to invest or save. Furthermore, everyone must be educated from an early age about financial issues because they will be taught about how to save, invest, budget, and borrow. The purpose of this article is to investigate the scientific literature on financial education and employment. To this end, we conducted a bibliometric analysis of financial literacy and the relationship between financial literacy and employment. The research methodology included a bibliometric analysis conducted with the VOSviewer software. The results highlight low rates of financial literacy in terms of knowledge, behaviour and attitude. The main determinants of poor financial literacy include poor financial education in schools, disinterest of people in the subject, limited accessibility to financial resources, and insufficient involvement of people in financial issues. Policy makers must take into account this unfavourable situation with respect to the state of financial literacy and implement actions to address it.
This paper aimed to empirically check and evaluate statistically significant differences in structural relationships of actual and perceived financial knowledge, risk tolerance, and risky investment intention, via in total of 995 questionnaires sent to a sample group of the informal laborers in southern Thailand. Partial least squares structural equation modelling was used to analyze the results. It is worth noting that even though both actual and perceived financial knowledge affected each individual’s risk tolerance, still perceived knowledge affected more the individual’s risk tolerance. The actual and perceived financial knowledge that the individuals possess would enable them to make sound investments. Our study added the multi-group analyses in order to investigate if gender affected each individual’s decision-making on investment. The results revealed that in the case of men, both actual and perceived financial knowledge positively correlated with risky investment intention, whereas in the case of women only actual financial knowledge did. The key point from our study indicated that confidence or self-perceived knowledge was a significant factor affecting individual decision-making on investments. Hence, the educators and policymakers should provide effective lessons on financial knowledge by creating actual knowledge in order to help avoid overconfidence.
Personality and Emotions are essential attributes that differentiate one individual from another. A thorough understanding of both constructs can be beneficial for uncovering the linkages in human behaviour. This review sought to determine whether emotional intelligence (EI) was only a measure of personality traits or a distinct concept. In this article, a systematic review is presented of the relationship between personality traits and emotional intelligence, through a review of 80 research papers spanning from the year 2000 to 2021. Papers have been critically
examined to identify the type of study, sample and models that have been employed over the years. Interest in this topic has gradually increased over the years and continues till today. The findings suggest that there is a relational and predictive relationship between emotional intelligence and personality traits; however, the results can vary depending on the combination of measures used. Additionally, personality traits are more closely associated with trait EI than ability EI. Despite the strong correlation between the two constructs, EI has been shown to be a reliable predictor of other variables beyond personality traits. Relation between EI and personality traits can vary among young and older individuals but the data available to support this claim is insufficient. The findings and research gaps that were
identified through this review have relevance for many different research domains.
India’s financial service sector has
changed dramatically and due to increased market
complexity and exposure to advanced financial
technology, individuals' financial responsibility
increased. Literacy is a key indicator of
development. According to the national education center, only 27% of Indians are financially
literate. As far as women are concerned only a small
fraction of women focus on developing their wealth
and investing with confidence as compared to
males. So Financial literacy is essential for every
woman so that she can live her life according to her
preferences, thereby contributing to her family's overall
health and prosperity. Although this
paper provides insight regarding financial literacy
among women by using a literature-based approach.
The Paper is exploratory and uses secondary
sources. Secondary data was collected
from websites, journals, research papers,
newspapers, and various regulatory bodies. It is
found that women’s financial literacy is quite poor
and they prefer safe and low-risk investments.
Despite its increasing importance, digital financial literacy (DFL) is yet to be adequately understood. This article reports on one aspect of DFL, namely, digital asset planning literacy (DAPL) which is an individual’s awareness of what happens to their digital assets on their death or incapacity. Our results from Australia and Singapore suggest that single, less-educated women are less likely to possess DAPL, and that the number of digital assets is negatively associated with DAPL, while having a Will is positively related to DAPL. With this study, we put forward that financial education should include consumer rights regarding digital financial assets.
Financial literacy, in a broad sense, is the knowledge and skills that empower people to make informed decisions regarding the use of financial services and the management of one’s private and business finances. The study discusses the detailed analysis of financial literacy, financial education, and management by the people of Bongo Gewog in Bhutan. The findings suggest that the financial literacy among the people of Bongo is high; however, the literal knowledge of financial literacy is low. The research also found that education has a significant relationship with financial literacy wherein people with higher levels of qualification demonstrated a higher level of financial literacy and vice versa. This research concluded that males were more financially literate when compared to females.
This study aims to examine the effect of financial literacy, financial inclusion, and digitization on the performance of SMEs. This study is quantitative and uses a survey method to collect data. An online questionnaire was distributed to respondents from SME managers in Purwokerto city. Data were analyzed using multiple regression analysis. The sample in this study was 118 respondents selected using a convenient sampling method. The results show that financial literacy, financial inclusion, and digitization positively affect SMEs’ performance. The results imply the importance of increasing financial literacy, financial inclusion, and digitization among SMEs in Purwokerto. The findings emphasize the crucial role of financial literacy, financial inclusion, and digitization in enhancing the performance and sustainability of SMEs in Purwokerto. These implications can lead to a supportive ecosystem that empowers SMEs, fosters economic growth, and creates regional employment opportunities.
financial literacy is one of the recent topics that have taken great research attention at the individual and institutional level, due to the cognitive and practical importance of an important economic variable and a major contributor to financial management and then to real financial development, as well as knowledge of its implications for behavioral biases as a modern and controversial approach to behavioral financial management. One of the most important objectives of this study is to know how degrees of financial knowledge, financial behavior, and financial position will affect changing the tendencies and behaviors of investors by measuring their impact on their emotional and cognitive biases and also designing an indicator to measure financial literacy and behavioral biases. The research community was the Iraq Stock Exchange with a sample of 360 investors for the year 2020, and the study showed a great variation in investor response to the dimensions of financial literacy, but on average, investors showed they possessed a good degree of financial knowledge. And that investors are somewhat biased in most paragraphs of behavioral biases, as they are characterized by overconfidence and that they reach the degree of certainty about their financial decisions and are averse to loss, and also suffer from cognitive biases, so they often make their decisions based on historical information or simulating others without investigation and research. Also, one of the most important findings of this study is the strong relationship between the dimensions of financial literacy combined with the dimensions of behavioral biases. The increase in financial knowledge resulted in a decrease in the overconfidence bias index, which is evidence that investors ’possession of high financial knowledge contributes
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to reducing the effects of many biases, including Overconfidence bias, grazing bias, representation bias and confirmation bias through the presence of strong negative relationships between the two variables and that there is a large and strong impact of the dimensions of financial literacy on behavioral biases, as the degree of financial awareness will explain many of the behaviors of individual investors. Great interest in financial literacy programs, the introduction of many approaches to educating individuals and investors financially, and also interest in the real twinning of financial literacy and financial inclusion programs and work to restore confidence between investors and the banking sector, preparing a national strategy for financial education and education with the participation of banks and parties from the public and private sectors, to enhance Citizens' financial awareness and knowledge, especially owners of small, medium and small enterprises Smallness, and also trying to understand the behavior of society and the reasons for the emergence of biases that cause anomalies in investment decision-making in order to know and determine whether the rise and fall in share prices are the result of collective thinking or miscalculation, adequate research, excessive confidence, etc., or purely financial reasons, by setting up development courses Social and psychological study of common phenomena of society.
The current research aims to analyze the relational marketing application in higher education institutions. Quantitative descriptive research was done, composed of two variables and ten indicators that explain these effects. The results describe the level of relation and student service contentment through digital marketing tools and communication channels for students enrolled in face-to-face and online classes. It has been determined that the digital tools with a more significant relation level to online students in academic matters are Instagram and YouTube. In the communication field, the Facebook tool and web portals show the highest percentage as significant, on the other hand, the most used communication channels to establish a relationship with the university during pandemic times were: Call Center, WhatsApp, virtual rooms, and every online service.KeywordsMarketing relationshipSatisfactionHigher education marketingStudent serviceDigital toolsCommunication channels
There are vast differences in wealth holdings, even among households in similar age groups. In addition, a large percentage of U.S. households arrive close to retirement with little or no wealth. While many explanations can be found to rationalize these facts, approximately thirty percent of households whose head is close to retirement have done little or no planning for retirement. Planning is shaped by the experience of other individuals: individuals learn to plan for retirement from older siblings. They also learn from the experience of old parents. In particular, unpleasant events, such as financial difficulties and health shocks at the end of life, provide incentives toward planning. In addition, planning affects wealth levels as well as portfolio choice. Individuals who plan are more likely to hold large amounts of wealth and to invest their wealth holdings in high return assets, such as stocks. Thus, planning plays an important role in explaining the saving behavior of many households. JEL classification: D91, E21, C21.
Consumer financial literacy has become a growing concern to educators, community groups, businesses, government agencies, and policymakers. Correspondingly, there has been an increase in the number and types of financial education programs available to households. Many of these programs focus on providing information to consumers and operate under the implicit assumption that increases in information and knowledge will lead to changes in financial-management practices and behaviors. ; This article focuses on four financial-management activities--cash-flow management, credit management, saving, and investment. Data from the Surveys of Consumers are used to analyze some of the connections between knowledge and behavior--what consumers know and what they do. Overall, financial knowledge was statistically linked to financial practices: Those who knew more were more likely to engage in recommended financial practices. In addition, certain types of financial knowledge were statistically significant for particular financial practices--knowing about credit, saving, and investment was correlated with higher probabilities of engaging in recommended credit, saving, and investment practices respectively. Although the causality could flow in either direction, this finding indicates that increases in knowledge may lead to improvements in financial-management practices. Thus, financial education in combination with skill-building and audience-targeted motivational strategies may be one way to elicit the desired behavioral changes in financial-management practices.
The role of employer-provided pensions and Social Security in shaping employees' retirement and saving behavior has attracted an enormous amount of attention from both researchers and policymakers over the past twenty-five years.1 In the research literature, the almost universal assumption is that workers are fully informed about the rules governing their employer- and government-provided pensions. However, to the limited extent that researchers have been able to test that assumption, results suggest that workers are less than fully informed (Bernheim 1988, Mitchell 1988, Gustman and Steinmeier 1989) and that providing information can affect their behavior (Clark and Schieber 1998; Bayer, Bernheim, and Scholz 1996; Bernheim and Garrett 1996; Madrian and Shea 2000). Despite a general lack of research on the role of information in retirement planning, policymakers have made information a central issue. The Social Security Administration (SSA), for example, recently began to mail workers statements of their accrued and projected benefits to improve their ability to plan for retirement; the SSA also has made a retirement planner available on its website. The U.S. Department of Labor has initiated several programs to examine the extent of workers' lack of information and to improve their knowledge of pensions and of saving for retirement in general. Following the 1997 Savings Are Vital to Everyone's Retirement (SAVER) Act, the National Summit on Retirement Savings, held in 1998, emphasized the need to educate the public about retirement planning through media campaigns and other means. In 2000 the Department of Labor celebrated the fifth anniversary of its Retirement Savings Education Campaign. And recent legislative proposals by Representative John Boehner of Ohio (HR 4747, 4748, and 4749) would significantly expand the scope of investment advice that employers are permitted to offer their employees. This chapter provides a comprehensive analysis of what workers (don't) know about their pensions and Social Security. This analysis is based on information from the Health and Retirement Study, described below. Relative to previous findings and current policy issues, the paper provides five key sets of information. First, it uses more recent data than previous studies. This is important because of the significant changes in the pension universe and in Social Security that have occurred over the last fifteen years. Second, the paper focuses on the distribution of differences between respondents' reports of requested information and linked reports obtained from records provided by the Social Security Administration or from detailed pension plan descriptions obtained from firms, examining the patterns of discrepancies at the level of the individual respondent more than did previous studies. Third, the paper examines the effects of poor information on economic behavior in order to assess the potential benefits of providing better information. Fourth, to improve understanding of misreporting and to provide a foundation for imputing pension and Social Security outcomes when data are not available, the analysis explores whether the differences between the cases that have linked Social Security and pension records and those that do not are related to demographic or other measures. Fifth, the appendix provides information of use to researchers, including an analysis of the relation between respondent-reported earnings histories and linked earnings histories from Social Security records. It also includes a set of equations that researchers can use to impute pension characteristics and plan values for cases without employer-provided pension plan descriptions and for researchers who do not have access to linked pension data. Our findings suggest that workers approaching retirement possess a great deal of misinformation about their pensions. Half of respondents with linked pension data correctly identified their plan type, but fewer than half could identify, within one year, the dates of their eligibility for early and normal retirement benefits. According to the firm-provided data, two-thirds of respondents would be eligible to retire by the time they reached age 55; however, less than half of respondents were aware that they were eligible. Those who were within three years of retiring forecast somewhat more accurately but did not do a much better job of forecasting their age of eligibility for early retirement than the sample as a whole. Eighty percent of respondents with a defined benefit plan either did not think that they were eligible for early retirement or did not know the benefit reduction rate for their plan. Respondents did better in reporting the value of their pension than their age of eligibility, but the unexplained variation is still considerable. Only half of the respondents ventured to guess their expected Social Security benefits, and only half of those came within $1,500 of the actual annual amount. On the whole, respondents were somewhat pessimistic in evaluating their defined benefit pensions, in contrast to findings from earlier studies. Respondents' and firms' calculations of pension benefit amounts were in rough agreement in only 40 percent of the cases. A preliminary analysis of how knowledge of Social Security and pension benefits affects retirement expectations, realization of those expectations, and wealth accumulation reveals complex relationships. Because it is easier to adjust saving downward than upward as one approaches retirement, even symmetric errors in expectations should affect retirement and saving outcomes. Yet respondents' lack of knowledge about Social Security and pension wealth and their inability to identify their plan type had only modest effects on retirement plans, on whether those plans were met, and on saving outcomes. Although researchers would like to work with the true value of pensions and Social Security benefits, in many surveys only respondents' reports were available. Our findings show that respondents' reports and other information about the respondents accounted for 80 percent of the variation in linked employerreported pension values and that respondent-reported work histories and other explanatory variables accounted for 75 percent of the variation in earnings obtained from linked Social Security records. Thus prospects are good for imputing pension and Social Security values, although they are not good for imputing the timing or size of incentives for early retirement. Implications for policy depend to an important degree on two considerations: the precise behavioral channels through which misinformation affects retirement and saving and whether increased educational efforts affect behavior and planning in a timely manner. However, there is little information on which to base an answer to either question.
Traditional mechanisms that spread mortality and longevity risk across a population group are increasingly being replaced by saving vehicles that leave this obligation in the hands of individual households. We explore the question of whether households are adequately saving for their future retirement by reviewing recent literature that examines household behavior in preparing for retirement - both in the accumulation phase and the decumulation phase - and by exploring representative households on the verge of retirement. While the median married couple of approximately fifty-five years of age holds assets totaling nearly $400,000, they still must engage in substantial saving to retire comfortably at age sixty-two.
Using the Surveys of Consumer Finance from 1989 to 2001, this study expolres households’ reasons for not having a checking account. Reasons havechanged over time, shifting away from account features and toward human capital and institutional reasons. We also find that reasons for not having an account are related to income, race/ethnicity, marital status/gender, planning horizon, education, previous account experience, and credit history. We suggest potential responses for community educators, firms, and policy makers.
We use a novel household survey to investigate the effects of employer-based financial education on personal saving. We explore cross-sectional relations between the availability of employer-based financial education and various measures of asset accumulation, and we interpret these patterns in light of various potentially confounding factors. Our findings favor the hypothesis that employer-based financial education stimulates saving, both in general and for retirement.
We compare wealth holdings across two cohorts of the Health and Retirement Study: the early Baby Boomers in 2004, and individuals in the same age group in 1992. Levels and patterns of total net worth have changed relatively little over time, though Boomers rely more on housing equity than their predecessors. Most important, planners in both cohorts arrive close to retirement with much higher wealth levels and display higher financial literacy than non-planners. Instrumental variables estimates show that planning behavior can explain the differences in savings and why some people arrive close to retirement with very little or no wealth.
This article evaluates the quality of workers' information regarding pension offerings using both administrative records and worker repor ts of pension provisions. Missing and incorrect information is widesp read. Unionized employees, higher income workers, better educated wor kers, and those with seniority are better informed about their pensio ns. There are also demographic differences: minorities have less pens ion knowledge than whites, but women are better informed than men alo ng several pension dimensions. Myopia about pension incentive structu res is troubling since workers may save or consume suboptimally, chan ge jobs, or retire earlier than they would have if equipped with bett er pension information. Copyright 1988 by University of Chicago Press.
This paper provides an answer to an important empirical puzzle in the retirement literature: while most people know little about their own pension plans, retirement behavior is strongly affected by pension incentives. We combine administrative and self-reported pension data to measure the retirement response to actual and perceived financial incentives and document an important role for self-reported pension data in determining retirement behavior. Well-informed individuals are far more responsive to pension incentives than the average individual. Ill-informed individuals seem to respond systematically to their own misperceptions of pension incentives. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Why do similar households end up with very different levels of wealth? We show that differences in the attitudes and skills with which they approach financial planning are a significant factor. We use new and unique survey data to assess these differences and to measure each household's "propensity to plan." We show that those with a higher such propensity spend more time developing financial plans, and that this shift in planning is associated with increased wealth. These findings are consistent with broad psychological evidence concerning the beneficial impacts of planning on goal pursuit. Those with a high propensity to plan may be better able to control their spending, and thereby achieve their goal of wealth accumulation. We find direct evidence supporting this effortful self-control channel in the very strong relationship we uncover between the propensity to plan and budgeting behavior. © 2001 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
Assessing the price evolution of houses on the basis of average sales prices, as is current practice in Belgium, might be misleading due to changing characteristics of the houses sold in the periods observed. A hedonic index which takes into account changes in characteristics is more appropriate. We use the budget surveys of the Belgian Statistical Institute to illustrate how this also applies for Belgium. The estimated hedonic price index for house sales on the secondary market is practically always below the index based on average sales values for the period considered. This demonstrates the need to collect more extensive data on the characteristics of the dwellings sold in Belgium.
The primary aim of the paper is to place current methodological discussions in macroeconometric modeling contrasting the ‘theory first’ versus the ‘data first’ perspectives in the context of a broader methodological framework with a view to constructively appraise them. In particular, the paper focuses on Colander’s argument in his paper “Economists, Incentives, Judgement, and the European CVAR Approach to Macroeconometrics” contrasting two different perspectives in Europe and the US that are currently dominating empirical macroeconometric modeling and delves deeper into their methodological/philosophical underpinnings. It is argued that the key to establishing a constructive dialogue between them is provided by a better understanding of the role of data in modern statistical inference, and how that relates to the centuries old issue of the realisticness of economic theories.
We compare the saving behavior of two cohorts: the Early Baby Boomers (EBB, age 51-56 in 2004) and the HRS cohort (age 51-56 in 1992). We find that EBB have accumulated more wealth than the previous cohort but they benefited from a large increase in house prices, which lifted the wealth of many home-owners. In fact, there are many families among EBB, particularly those headed by respondents with low education, low income, and minorities, which have less wealth than the previous cohort. Lack of wealth can be traced to lack of retirement planning. Notwithstanding the many initiatives aimed at fostering planning in the 1990s, a large portion of EBB still do not plan for retirement even though most respondents are close to it. The effect of planning is remarkably similar between the two cohorts; those who do not plan accumulate much lower amounts of wealth - from 20 to 45 percent depending on the location in the wealth distribution- than those who do plan. Thus, for both the EBB and the HRS cohort, lack of planning is tantamount to lack of saving irrespective of the many changes in the economy between 1992 and 2004.
We present a model in which individuals' preferences are defined over their consumption, transfers to offspring, and social status associated with income. We show that a separating equilibrium exists where individuals' expenditure on conspicuous consumption is a signal for their unobserved income. In this equilibrium, poor families that climb up the social ladder by the accumulation of wealth engage in conspicuous consumption that prevents them from escaping poverty. Our model may explain why the poor make some choices that do not appear to help them escape poverty. (JEL: D91, O11, O12, O15) (c) 2010 by the European Economic Association.
Evidence suggests only a minority of American households feels "confident" about retirement saving adequacy. Little is known about why people fail to plan for retirement, and whether planning and information costs might affect retirement saving patterns. To better understand these issues, we devised and fielded a purpose-built module on planning and financial literacy for the 2004 Health and Retirement Study (HRS). This module measures how workers make their saving decisions, how they collect the information for making these decisions, and whether they possess the financial literacy needed to make these decisions. Our analysis shows that financial illiteracy is widespread among older Americans: only half of the age 50+ respondents could correctly answer two simple questions regarding interest compounding and inflation, and only one-third understood these as well as stock market risk. Women, minorities, and those without a college degree were particularly at risk of displaying low financial knowledge. We also evaluate whether people tried to figure out how much they need to save for retirement, whether they devised a plan, and whether they succeeded at the plan. In fact, these calculations prove to be difficult: fewer than one-third of our age 50+ respondents ever tried to devise a retirement plan, and only two-thirds of those who tried, actually claim to have succeeded. Overall, fewer than one - fifth of the respondents believed that they engaged in successful retirement planning. We also find that financial knowledge and planning are clearly interrelated: those who displayed financial knowledge were more likely to plan and to succeed in their planning. Moreover, those who did plan were more likely to rely on formal planning methods such as retirement calculators, retirement seminars, and financial experts, and less likely to rely on family/relatives or co-workers.
This paper shows that increases in the minimum wage rate can have ambiguous effects on the working hours and welfare of employed workers in competitive labor markets. The reason is that employers may not comply with the minimum wage legislation and instead pay a lower subminimum wage rate. If workers are risk neutral, we prove that working hours and welfare are invariant to the minimum wage rate. If workers are risk averse and imprudent (which is the empirically likely case), then working hours decrease with the minimum wage rate, while their welfare may increase.
In 1995, the Social Security Administration started sending out the annual Social Security Statement. It contains information about the worker’s estimated benefits at the ages 62, 65, and 70. We use this unique natural experiment to analyze the retirement and claiming decision making. First, we find that, despite the previ- ous availability of information, the Statement has a significant impact on workers’ knowledge about their benefits. These findings are consistent with a model where workers need to gather costly information in order to improve their retirement deci- sion. Second, we use this exogenous variation in knowledge to analyze the optimality of workers’ decisions. We do not find an overall improvement in workers’ retirement behavior, but there are some changes among particular groups. Workers aged 62 and 65 become less sensitive to Social Security Incentives. Age 62 and 65 are the two ages at which the retirement benefits are reported in the Statement, which suggests that some workers may use them as focal points. Additionally, we find evidence that before the Statement was introduced uninformed workers, who are more likely to be low–educated and black, made, on average, worse retirement decisions, and that workers with a dependent spouse usually disregarded their own spouse’s benefits in their calculations. The information contained in the Statement appears to have helped both groups, though with the important exception of black workers.
Savings and the Effectiveness of Financial Education In Pension Design and Structure: New Lessons from Behavioral Finance
- Annamaria Lusardi
Lusardi, Annamaria. 2004. " Savings and the Effectiveness of Financial Education. " In Pension
Design and Structure: New Lessons from Behavioral Finance, edited by Olivia Mitchell
and Stephen Utkus. Oxford: Oxford University Press: 157-184.
What American Teens and Adults Know About Economics
National Council on Economic Education. 2005. " What American Teens and Adults Know
About Economics. "
Increased Saving but Little Planning. Results of the 1997 Retirement Confidence Survey
- Paul Yakoboski
- Jennifer Dickemper
Yakoboski, Paul and Jennifer Dickemper. 1997. " Increased Saving but Little Planning. Results
of the 1997 Retirement Confidence Survey. " EBRI Issue Brief 191.
.057*
(.030)
.038
(.030)
.072***
(.024)
.062**
(.027)
.043
(.027)
Employee Benefits Research Institute (EBRI) Retirement Confidence Survey (RCS), Minority RCS, and Small Employer Retirement Survey
Employee Benefits Research Institute (EBRI). 2001. " Retirement Confidence Survey (RCS),
Minority RCS, and Small Employer Retirement Survey. " Issue Brief 234.
Health Risk, Financial Information and Social Interaction: the Portfolio Choice of European Elderly Households Working paper
- Dimitris Christelis
- Tullio Jappelli
- Mario Padula
Christelis, Dimitris, Tullio Jappelli, and Mario Padula. 2005. " Health Risk, Financial
Information and Social Interaction: the Portfolio Choice of European Elderly
Households. " Working paper. University of Salerno.
Employee Benefits Research Institute (EBRI) Participant Education: Actions and Outcomes
Employee Benefits Research Institute (EBRI). 1996. " Participant Education: Actions and
Outcomes. " Issue Brief 169.
Explaining Retirement Saving Shortfalls " . In Forecasting Retirement Needs and Retirement Wealth edited by
- Olivia S Mitchell
- James Moore
- John Phillips
Mitchell, Olivia S., James Moore, and John Phillips. 2000. " Explaining Retirement Saving
Shortfalls ". In Forecasting Retirement Needs and Retirement Wealth edited by O. S.
Mitchell, B. Hammond, & A. Rappaport. Philadelphia, PA: Univ. of Pennsylvania Press:
139-166.
Financial Knowledge, Experience and Learning Preferences: Preliminary Results from a New Survey on Financial Literacy
- Jeanne Hogarth
- Marianne Hilgert
Hogarth, Jeanne and Marianne Hilgert. 2002. "Financial Knowledge, Experience and Learning
Preferences: Preliminary Results from a New Survey on Financial Literacy." Consumer
Interest Annual, 48.
Financial Literacy: Are We Improving
- Lewis Mandell
Mandell, Lewis. 2004. " Financial Literacy: Are We Improving? " Washington, D.C.: Jump$tart
Coalition for Personal Financial Literacy.
Prospect for Widow Poverty In Forecasting Retirement Needs and Retirement Wealth
- David Weir
- Robert Willis
Weir, David and Robert Willis. 2000. " Prospect for Widow Poverty. " In Forecasting Retirement
Needs and Retirement Wealth, edited by Olivia Mitchell, Peter Hammond and Anna
Rappaport, Philadelphia, University of Pennsylvania Press, 208-234.