How Financial Literacy Affects Household Wealth Accumulation

“ment are often about 10 percent, producing a bias towards zero of almost that magnitude (Behrman, Rosenzweig, and Taubman 1994). 6 Detailed descriptions of each of these variables are provided in Behrman et al. (2010). 7 For example, family background variables such as”

“Others report positive correlations between financial literacy and asset accumulation, but questions have been raised about whether these associations reflect causality (Lusardi and Mitchell 2008, 2010).”

“A final set of questions touches on key aspects of the Chilean retirement system, including the mandatory contribution rate, minimum male and female retirement ages, how pension benefits are computed, whether people know about the welfare program for the elderly, and whether people know they can contribute to a Volunt…”

“A second, more “sophisticated,” set of three questions was devised for a special HRS module (Lusardi and Mitchell, 2007c) to measure more complex concepts such as compound interest, inflation, and risk diversification.”

“…attainment, as measured by the household head’s years of schooling, are likely to earn higher incomes and have better financial literacy, allowing them to generate more wealth than those with lower educational levels (Behrman et al. 2012; Benton and Keister 2017; Soseco, Hidayah and Rini 2022).”

“So far there has been only a lot of research within the western world (Behrman et al., 2012; Brown et al., 2018; Chambers et al., 2019; Lusardi et al., 2010; Riebe, 2018).3 The main goal of this paper is the comparison of financial knowledge and understanding between German and Korean higher…”

“At the same time, we observe low levels of financial literacy across large parts of the population worldwide (Lusardi and Mitchell (2011a), Lusardi and Mitchell (2014)), indicating a low ”ability to process economic information and make informed decisions” (Behrman et al. (2012)).”

“Behrman, Mitchell, Soo, and Bravo (2012) indicate a strongly positive correlation between financial literacy, schooling attainment and wealth [19].”

“Some studies that show the relationship between education and household wealth as explained above are, for example, Behrman et al. (2012), Benton & Keister (2017), Filmer & Pritchett (1998), and Hartog & Oosterbeek (1998).”

“Financial literacy is positively correlated with outcomes such as credit management (Akin et al, 2012), savings (Behrman et al, 2012), and investment decisions (Abreu and Mendes, 2010).”

“…(Lusardi and Mitchell, 2007; Lusardi and Mitchell, 2008; Van Rooij et al., 2012), stock market participation (Van Rooij et al. 2011; Balloch et al. 2015), wealth accumulation (Behrman et al., 2012; Gustman et al., 2012), debt accumulation (Lusardi and Tufano, 2015), and risk (Lusardi, 2015).”

“This system is justified because workers, who are not, in general, knowledgeable about investment decisions, are compelled to contribute and are guaranteed a minimum pension by the state (Behrman et al. 2012; Mitchell and Ruiz 2011).”

“…and decision taking with respect to household finances (Banks and Oldfield 2007, Banks et al. 2010, Smith et al. 2010, Christelis et al. 2010, Behrman et al. 2012, Agarwal and Mazumder 2013), health insurance (Fang et al. 2008) and health (Gottfredson and Deary 2004, Cutler and Lleras-Muney…”

“For one, Behrman et al. (2010b) exploit household data for Chile to examine the impact of financial literacy and schooling on wealth accumulation.”

“It covers wealth, schooling, financial literacy, work history, childhood background, social protection, and selected personality traits [37].”

“…that under-saving is prevalent in many advanced economies and that households tend to save in inefficient ways, indicating that many may be unable to cope with the increasingly complex financial markets (e.g., Lusardi and Mitchell 2007; Choi et al. 2011, Behrman et al. 2012; van Rooij et al. 2012).”

“…planning (Bucher-Koenen and Lusardi, 2011; Lusardi, 2008; Lusardi and Mitchell, 2006a, 2006b, 2009; Van Rooij et al. , 2009), as well as between financial literacy and wealth accumulation at old age (Behrman et al. , 2012; Lusardi, 2008; Lusardi and Mitchell, 2006a; Van Rooij et al. , 2012 ).”

“The procedure is very similar to the weighting method PRIDIT used by Behrman et al. (2012) to create more robust financial literacy scores.”

“In addition, studies demonstrate that a positive correlation exists between financial literacy and the distribution of income (e.g. Behrman et al., 2012).”

“According to Behrman et al. (2012), financial literacy plays a significant role in both wealth accumulation and business performance.”

“There have been studies that attempted to evaluate financial literacy training, with inconsistent findings regarding its impact on financial behaviour (see for example Stango and Zinman 2007; Lusardi 2008; Mandell and Klein 2009; Behrman et al. 2012; Cole, Sampson, and Bilal 2011).”

“It is an unfortunate reality that individuals who lack control of their financial environment are unlikely to build financial literacy (Behrman et al., 2012).”

“A positive relationship has also been identified between financial literacy and wealth accumulation (Behrman et al. 2012), as well as financial literacy and liquid and illiquid assetholding among young adults (Letkiewicz and Fox 2014).”

“…dana pensiun, yang semula dikelola oleh pemerintah dan pemberi kerja namun kini beralih ke masing-masing individu pekerja pun turut menuntut individu supaya semakin bijak dalam merencanakan dan mengelola kebutuhan finansial selama masa pensiun (Behrman et al., 2012; Gustman et al., 2012).”

“Most studies on financial literacy examine the relationship between financial literacy and individual-level outcomes like savings, 2See for example Behrman et al. (2012); Lusardi (2015); Lusardi and Mitchell (2007, 2011, 2017); Monticone (2010). investment or default behaviour (see Lusardi and…”

“Behrman et al. (2012) examined "financial literacy, schooling and wealth accumulation," and in this literature, highlighted how to gain financial literacy by adopting digital knowledge. Therefore, it is essential to implement the pedagogy learning method for online teaching, enabling an individual for distance learnin…”

“They usually borrow more, save less (Behrman et al., 2012; Stango and Zinman, 2009), and retire early more frequently (Allen et al., 2012).”

“2011; Hastings and Mitchell 2011; Lusardi and Mitchell 2011), which leads to more sizeable wealth accumulated throughout life (Jappelli and Padula 2013; Behrman et al. 2012; van Rooij et al. 2012; French and McKillop 2014). It has been further established that financial literacy is positively associated with more heal…”

“…portfolio choices (Chu et al. 2017) retirement planning (Lusardi and Mitchell 2017; Yeh 2022, and the references therein), wealth accumulation (Behrman et al. 2012; Jappelli and Padula 2013; Stango and Zinman 2009; Van Rooij et al. 2012), and debt management (Brown et al. 2016; Lusardi and…”

“Financially aware individuals tend to hold risk-ier assets and have more diversified portfolios, which can lead to higher returns and increased overall wealth (Abreu and Mendes 2010; Behrman et al. 2012; Bianchi 2018; Von Gaudecker 2015).”

“…financial behavior variables (Laily, 2016; Yushita, 2017), debt behavior (Bahovec et al., 2015), financial well-being (Aulia et al., 2019), household wealth (Behrman et al., 2012), financial inclusion (Yushita, 2017), and investment decisions (Al-Tamimi & Kalli, 2009; Baihaqqy et al., 2020).”

“General knowledge and financial literacy contribute to financial decision-making (Rooij et al. 2011, Behrman et al. 2012, Lusardi & Scheresberg 2013).”

“The full set of questions includes 12 questions about basic numeracy, more sophisticated financial knowledge, and their knowledge of the pension system (Behrman et al., 2012).”

“Financial literacy increases the likelihood of communities contributing to their retirement savings indicating that this is a valuable pathway through which the increased financial literacy can build the household‘s net worth [10].”

“The majority of them focused on the level and extent of financial literacy and on illiteracy closely tied to retirement planning and wealth accumulation (Lusardi et al., 2011, Behrman et al., 2012), especially in the United States.”

“Research shows that the standard financial practices have been developed to a set of recommended personal financial management practices that have been empirically tested and proofed to positively influence financial decision making process (Behrman et al., 2012; Hira,2012).”

“Furthermore, Behrman et al. (2012) and Lusardi (2008) examined the impact of financial literacy by households’ wealth accumulation for various purposes, such as retirement planning, which involves more risky assets and more efficient investments. Other studies found that highly financially sophisticated individuals te…”

“Findings of significant gender differences in financial literacy (Lusardi and Mitchell, 2008), and particularly for less-educated and single women (Behrman, et al., 2012), therefore have important implications for financial decisions.”

“Financial knowledge promotes saving planning and, consequently, the accumulation of wealth (Behrman et al., 2012; Hilgert et al., 2003).”

“Some researchers argue that higher income levels also promote financial literacy accumulation, as higher-income individuals often have more educational opportunities and access to financial information (Behrman et al., 2012; Prasad et al., 2018).”

“…students’ financial literacy aligns with existing literature suggesting that parental education (Al-Bahrani et al., 2020, Lusardi & Mitchell, 2011; Behrman et al., 2012; Van Rooij et al., 2011), particularly that of the father, can significantly influence a child’s financial knowledge and…”

“For example, Behrman et al. (2012) and Lusardi and Mitchell (2011) found that individuals with lower financial literacy levels are generally less prepared for retirement and tend to accumulate fewer retirement assets.”

“Atkinson and Messy (2012) and the OECD (2013), among others, have discovered that women, compared to males, are more likely to have trouble saving money and choosing the right financial products [2,3].”

“…income, and residence area.2 Another control variable is financial literacy, which has been documented to have a bearing on financial behaviors (Behrman et al., 2012; Disney & Gathergood, 2013; Klapper et al., 2013; Lusardi & Mitchell, 2007a, 2007b; Rooij et al., 2011; Yeh, 2022; Yeh &…”

“This is strongly reinforced if individuals also have a high degree of financial literacy (Behrman et al., 2012; Lusardi & Mitchell, 2014). Financial literacy tends to be lower amongst the young, women, the less educated, and ethnic minorities (Lusardi & Mitchell, 2011). Using data from the Rand American Life Panel, Fo…”