Financial literacy around the world: an overview
Open accessAbstract
In an increasingly risky and globalized marketplace, people must be able to make well-informed financial decisions. New international research demonstrates that financial illiteracy is widespread in both well-developed and rapidly changing markets. Women are less financially literate than men, the young and the old are less financially literate than the middle-aged, and more educated people are more financially knowledgeable. Most importantly, the financially literate are more likely to plan for retirement. Instrumental variables estimates show that the effects of financial literacy on retirement planning tend to be underestimated. In sum, around the world, financial literacy is critical to retirement security.
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Financial literacy is positively related to savings behavior.
“A related strand of literature has also documented a positive relation between financial literacy and savings behavior (e.g., Lusardi and Mitchell 2011c;Chan and Stevens 2008;Behrman et al. 2012), i.e. providing additional evidence that financially literate individuals exhibit a greater tendency to plan ahead.”
From Financial literacy, financial advice, and financial behavior (2017) · cites this paper as Lusardi and Mitchell 2011c
In “Financial literacy around the world,” the paper reports that more financially literate people are more likely to plan for retirement. “Does financial literacy matter?” reports that retirement planners accumulate more savings, but the paper uses planning as its measured behavioral outcome rather than directly establishing the claimed relationship between financial literacy and savings behavior. Page numbers are unavailable in our copy. (LLM, conf=0.84)
Experimental — accuracy not yet measuredOn average, about one third of the global population has familiarity with the basic concepts that underlie everyday financial decisions.
“On average, about one third of the global population has familiarity with the basic concepts that underlie everyday financial decisions (Lusardi and Mitchell, 2011c).”
From Financial literacy and the need for financial education: evidence and implications (2019) · cites this paper as Lusardi and Mitchell, 2011c
The Measuring financial literacy section examines basic concepts relevant to everyday financial decisions, and the Concluding remarks report low financial literacy across eight countries. Neither section gives an estimate that about one third of the global population knows those concepts. The one-third figure in Financial literacy around the world refers instead to U.S. respondents who said they did not know how to answer a risk-diversification question. (LLM, conf=0.87)
Experimental — accuracy not yet measuredThe majority of contributions to the literature document a positive correlation between formal education and financial literacy.
“Furthermore, the majority of contributions to the literature document a positive correlation between formal education and financial literacy (Lusardi and Mitchell 2011c;Christelis et al. 2010;Lusardi 2012).”
From Financial literacy, financial advice, and financial behavior (2017) · cites this paper as Lusardi and Mitchell 2011c
Financial literacy is low even in advanced economies with well-developed financial markets.
“Financial literacy is low even in advanced economies with well-developed financial markets.”
From Financial literacy and the need for financial education: evidence and implications (2019) · cites this paper as Lusardi and Mitchell, 2011c
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Percentages, sums and reported differences re-computed from the paper’s own numbers.
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Cites
Financial literacy and stock market participation
van Rooij, M., Lusardi, A., & Alessie, R. (2011) · Journal of Financial Economics · doi:10.1016/j.jfineco.2011.03.006 · Cited by 3,554 · cited 1× · see citing works
“More financially literate individuals tend to include stocks in their portfolios, as they better understand the principle of risk diversification (Van Rooij et al. 2011; Christelis et al. 2010).”
Self-citationFinancial Literacy Among the Young
Lusardi, A., Mitchell, O. S., & Curto, V. (2009) · SSRN Electronic Journal · doi:10.2139/ssrn.1476982 · Cited by 1,804 · see citing works
Self-citationPlanning and Financial Literacy: How Do Women Fare?
Lusardi, A., & Mitchell, O. S. (2008) · American Economic Review · doi:10.1257/aer.98.2.413 · Cited by 1,512 · see citing works
Self-citationUnderstanding Pensions: Cognitive Function, Numerical Ability and Retirement Saving*
Banks, J., & Oldfield, Z. (2007) · Fiscal Studies · doi:10.1111/j.1475-5890.2007.00052.x · Cited by 345 · see citing works
The Outlook for Financial Literacy
Lusardi, A., & Mitchell, O. (2011) · doi:10.3386/w17077 · Cited by 125 · see citing works
Self-citation
Flagged first, then by citations
Research works printed but not linked: 11
- Ameriks John Caplin Andrew Leahy John 2003 Wealth Accumulation and the Propensity to Plan Quarterly Journal of Economics 68 1007 1047
- Behrman Jere Mitchell Olivia S Soo Cindy Bravo David 2010 Financial Literacy, Schooling, and Wealth Accumulation NBER WP 16452 PMC3554245 23355747
- Bernheim Douglas 1998 Financial Illiteracy, Education and Retirement Saving Mitchell OS Schieber S Living with Defined Contribution Pensions University of Pennsylvania Press Philadelphia 38 68
- Christelis Dimitris Jappelli Tullio Padula Mario 2010 Cognitive Abilities and Portfolio Choice European Economic Review 54 18 38
- Hastings Justine Mitchell Olivia S 2011 How Financial Literacy and Impatience Shape Retirement Wealth and Investment Behaviors NBER Working Paper 16740 PMC8025834 33833619
- Hilgert Marianne Hogarth Jeanne Beverly Sondra 2003 Household Financial Management: The Connection between Knowledge and Behavior Federal Reserve Bulletin 309 32
- Lusardi Annamaria 1999 Information, Expectations, and Savings for Retirement Aaron Henry Behavioral Dimensions of Retirement Economics Washington, D.C. Brookings Institution Press and Russell Sage Foundation 81 115
- Lusardi Annamaria Beeler Jason 2007 Saving Between Cohorts: The Role of Planning Madrian B Mitchell O Soldo B Redefining Retirement: How Will Boomers Fare? Oxford University Press Oxford 271 295
- Lusardi Annamaria Mitchell Olivia S 2007a Baby Boomer Retirement Security: The Role of Planning, Financial Literacy, and Housing Wealth Journal of Monetary Economics 54 205 224
- Mitchell Olivia S 2011 Managing Risks in Defined Contribution Plans: What Does the Future Hold? Growing Old: Paying for Retirement and Institutional Money Management After the Financial Crisis Fuchita Yasuyuki Herring Richard J Litan Robert E Brookings Institution Press and Nomura Institute of Capital Markets Research Forthcoming
- Poterba James Venti Steve Wise David 2008 The Changing Landscape of Pensions in The United States Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs Lusardi A Chicago University of Chicago Press 17 46
Cited by
Sorted by citations
The Economic Importance of Financial Literacy: Theory and Evidence
Lusardi, A., & Mitchell, O. S. (2014) · Journal of Economic Literature · doi:10.1257/jel.52.1.5 · Cited by 4,698 · see citing works
Self-citationDebt literacy, financial experiences, and overindebtedness
LUSARDI, A., & TUFANO, P. (2015) · Journal of Pension Economics and Finance · doi:10.1017/s1474747215000232 · Cited by 1,412 · see citing works
Self-citationFinancial literacy and the need for financial education: evidence and implications
Lusardi, A. (2019) · Swiss Journal of Economics and Statistics · doi:10.1186/s41937-019-0027-5 · Cited by 1,135 · see citing works
“Those interested in learning more about the differences in financial literacy across demographics and other characteristics can consult Lusardi and Mitchell (2011c, 2014).”
InfluentialSelf-citationOptimal Financial Knowledge and Wealth Inequality
Lusardi, A., Michaud, P.-C., & Mitchell, O. S. (2017) · Journal of Political Economy · doi:10.1086/690950 · Cited by 690 · see citing works
Self-citationFinancial literacy, financial advice, and financial behavior
Stolper, O. A., & Walter, A. (2017) · Journal of Business Economics · doi:10.1007/s11573-017-0853-9 · Cited by 471 · see citing works
“A related strand of literature has also documented a positive relation between financial literacy and savings behavior (e.g., Lusardi and Mitchell 2011c; Chan and Stevens 2008; Behrman et al. 2012), i.e. providing additional evidence that financially literate individuals exhibit a greater tendency…”
InfluentialFinancial Literacy and Financial Behavior among Young Adults: Evidence and Implications
de Bassa Scheresberg, C. (2013) · Numeracy · doi:10.5038/1936-4660.6.2.5 · Cited by 292 · see citing works
“…to actual financial knowledge, Lusardi and Mitchell (2008, 2011a, 2011b, 2011c) show that the capacity to do a simple interest rate calculation and the knowledge of inflation and risk diversification are strikingly low among the young (a finding confirmed by Lusardi, Mitchell, and Curto 2010).”
Financial Literacy and Economic Outcomes: <i>Evidence and Policy Implications</i>
Mitchell, O. S., & Lusardi, A. (2015) · The Journal of Retirement · doi:10.3905/jor.2015.3.1.107 · Cited by 235 · see citing works
Self-citationFinancial literacy and retirement planning in Canada
BOISCLAIR, D., LUSARDI, A., & MICHAUD, P.-C. (2017) · Journal of Pension Economics and Finance · doi:10.1017/s1474747215000311 · Cited by 213 · see citing works
Self-citationIn Our Best Interest: Women, Financial Literacy, and Credit Card Behavior
Mottola, G. (2013) · Numeracy · doi:10.5038/1936-4660.6.2.4 · Cited by 194 · see citing works
Shao, J., Zhang, Q., Ren, Y., Li, X., & Lin, T. (2019) · Journal of Elder Abuse & Neglect · doi:10.1080/08946566.2019.1625842 · Cited by 151 · see citing works
Sound credit scores and financial decisions despite cognitive aging
Li, Y., Gao, J., Enkavi, A. Z., Zaval, L., Weber, E. U., & Johnson, E. J. (2015) · Proceedings of the National Academy of Sciences · doi:10.1073/pnas.1413570112 · Cited by 142 · see citing works
EMPLOYEE FINANCIAL LITERACY AND RETIREMENT PLAN BEHAVIOR: A CASE STUDY
Clark, R., Lusardi, A., & Mitchell, O. S. (2017) · Economic Inquiry · doi:10.1111/ecin.12389 · Cited by 120 · see citing works
Self-citationOptimal Financial Knowledge and Wealth Inequality
Lusardi, A., Michaud, P.-C., & Mitchell, O. (2013) · doi:10.3386/w18669 · Cited by 89 · see citing works
Self-citationCredit counseling: a substitute for consumer financial literacy?
DISNEY, R., GATHERGOOD, J., & WEBER, J. (2015) · Journal of Pension Economics and Finance · doi:10.1017/s1474747215000219 · Cited by 64 · see citing works
- Authors
- LUSARDI, A., & MITCHELL, O. S.
- Affiliations
- George Washington University (US)
- University of Pennsylvania (US)
- Venue
- Journal of Pension Economics and Finance
- Publisher
- Cambridge University Press (CUP)
- Published
- 2011-10
- Volume
- 10
- Issue
- 4
- Pages
- 497-508
- ISSN
- 1474-7472 (ISSN-L)
- 1475-3022
- PMC
- PMC5445931
- OpenAlex
- W3121995747
- Cited by
- 2,000
- References
- 5
- Citations by year
- 2026: 149 · 2025: 207 · 2024: 245 · 2023: 235 · 2022: 177 · 2021: 194 · 2020: 169 · 2019: 127 · 2018: 102 · 2017: 98 · 2016: 73 · 2015: 78 · 2014: 58 · 2013: 50 · 2012: 27
- FWCI
- 162.25
- Type
- journal article
- Language
- en
- Open access
- green
- www.ncbi.nlm.nih.gov
- Locations
- Journal of Pensions Economics and Finance (publishedVersion)
- PubMed (publishedVersion)
- Europe PMC (PubMed Central) (acceptedVersion)
- PubMed Central (acceptedVersion)
- Funders
- National Institute on Aging (U01AG009740)
- Topics
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy and Behavior
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Keywords
- financial literacy, financial illiteracy, retirement planning, retirement security, gender differences, educational attainment, racial and ethnic differences, urban-rural differences, older adults, cross-national comparison, financial markets
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