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Cited by 199Financial Literacy, Pension, Retirement AnalysisFinancial Literacy and BehaviorDecision-Making and Behavioral Economics

Financial Illiteracy and Stock Market Participation: Evidence from the RAND American Life Panel

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Yoong, Joanne·2011·Financial Literacy: Implications for Retirement Security and the Financial Marketplace
DOI 10.1093/acprof:oso/9780199696819.003.0005
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Abstract

Financially unsophisticated consumers who consistently make sub-optimal financial decisions may suffer lasting consequences for long-term wealth accumulation and welfare. This paper focuses attention on a well-documented area of potentially suboptimal financial decision making: the lack of stock market participation. Using a broad-based assessment of financial literacy administered to a sample of older American respondents in the RAND American Life Panel (ALP), we use a novel strategy for establishing causation between stock-market related financial literacy and stock market participation, using knowledge of other financial topics as instrumental variables. We find that ignorance of stock market investment knowledge significantly reduces propensity to hold stocks. In particular, a decrease of one-standard deviation in the relevant measure suggests a decrease on the order of 10% in participation.

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Crossref · 10.1093/acprof:oso/9780199696819.003.0005

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  • Financially sophisticated individuals are more likely to hold stocks and mutual funds in U.S. survey data.

    “Analyzing U.S. survey data, Yoong (2011) confirms that financially sophisticated individuals are more likely to hold stocks and mutual funds.”

    From Financial literacy, financial advice, and financial behavior (2017) · cites this paper as Yoong (2011)

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Authors
Yoong, J.
Corresponding author
Yoong, Joanne
ORCID
Yoong, Joanne
Venue
Financial Literacy: Implications for Retirement Security and the Financial Marketplace
Publisher
Oxford University Press
Published
2011-10-27
Pages
76-97
DOI
10.1093/acprof:oso/9780199696819.003.0005
OpenAlex
W4247692901
Cited by
199
References
1
Citations by year
2026: 6 · 2025: 8 · 2024: 13 · 2023: 10 · 2022: 19 · 2021: 11 · 2020: 15 · 2019: 15 · 2018: 18 · 2017: 11 · 2016: 9 · 2015: 14 · 2014: 17 · 2013: 14 · 2012: 9
FWCI
144.63
Type
book chapter
Language
en
Open access
Locations
  • Oxford University Press eBooks (publishedVersion)
  • SSRN Electronic Journal (acceptedVersion)
  • ScholarlyCommons (University of Pennsylvania) (submittedVersion)
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, stock market participation, financial decision-making, investment knowledge, older adults, wealth accumulation, financial illiteracy, causality, instrumental variables

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