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Financial Literacy and Retirement Planning in Germany

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  • Tabea Bucher-Koenen
  • Annamaria Lusardi
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    Abstract

    We examine financial literacy in Germany using data from the SAVE survey. We find that knowledge of basic financial concepts is lacking among women, the less educated, and those living in East Germany. In particular, those with low education and low income in East Germany have little financial literacy compared to their West German counterparts. Interestingly, there is no gender disparity in financial knowledge in the East. In order to investigate the nexus of causality between financial literacy and retirement planning, we develop an IV strategy by making use of regional variation in the financial knowledge of peers. We find a positive impact of financial knowledge on retirement planning.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17110.

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    Date of creation: Jun 2011
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    Publication status: published as “ Financial Literacy and Retireme n t Planning in Germany, ” joint with Ta bea Bucher - Koenen , Journal of Pension Economics and Finance , October 2011, vol. 10(4), pp. 5 65 - 584 .
    Handle: RePEc:nbr:nberwo:17110

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    1. M.C.J. van Rooij & Annamaria Lusardi & R. Alessie, 2007. "Financial Literacy and Stock Market Participation," Working Papers, Utrecht School of Economics 07-23, Utrecht School of Economics.
    2. Axel Boersch-Supan & Christina B. Wilke, 2004. "The German Public Pension System: How it Was, How it Will Be," NBER Working Papers 10525, National Bureau of Economic Research, Inc.
    3. Börsch-Supan, Axel & Reil-Held, Anette & Schunk, Daniel, 2008. "Saving incentives, old-age provision and displacement effects: evidence from the recent German pension reform," Journal of Pension Economics and Finance, Cambridge University Press, Cambridge University Press, vol. 7(03), pages 295-319, November.
    4. Tabea Bucher-Koenen & Michael Ziegelmeyer, 2011. "Who lost the most? Financial Literacy, Cognitive Abilities, and the Financial Crisis," BCL working papers, Central Bank of Luxembourg 54, Central Bank of Luxembourg.
    5. Luigi Guiso & Tullio Jappelli, 2002. "Stockholding in Italy," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 82, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
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    Cited by:
    1. Spataro, Luca & Corsini, Lorenzo, 2013. "Endogenous financial literacy, saving and stock market participation," MPRA Paper 44342, University Library of Munich, Germany.
    2. Elsa Fornero & Chiara Monticone & Serena Trucchi, 2011. "The effect of financial literacy on mortgage choices," CeRP Working Papers 121, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    3. Alessie, Rob & Angelini, Viola & van Santen, Peter, 2013. "Pension wealth and household savings in Europe: Evidence from SHARELIFE," European Economic Review, Elsevier, Elsevier, vol. 63(C), pages 308-328.
    4. Bucher-Koenen, Tabea, 2011. "Financial Literacy, Riester Pensions, and Other Private Old Age Provision in Germany," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 11250, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    5. Antonia Grohmann & Roy Kouwenberg & Lukas Menkhoff, 2014. "Financial Literacy and Its Consequences in the Emerging Middle Class," Kiel Working Papers 1943, Kiel Institute for the World Economy.
    6. Annamaria Lusardi & Olivia S. Mitchell, 2013. "The Economic Importance of Financial Literacy: Theory and Evidence," NBER Working Papers 18952, National Bureau of Economic Research, Inc.
    7. Frank Erp & Niels Vermeer & Daniel Vuuren, 2014. "Non-financial Determinants of Retirement: A Literature Review," De Economist, Springer, Springer, vol. 162(2), pages 167-191, June.
    8. Fort, Margherita & Manaresi, Francesco & Trucchi, Serena, 2012. "Banks Information Policies, Financial Literacy and Household Wealth," IZA Discussion Papers 6989, Institute for the Study of Labor (IZA).
    9. Wobker, Inga & Lehmann-Waffenschmidt, Marco & Kenning, Peter & Gigerenzer, Gerd, 2012. "What do people know about the economy? A test of minimal economic knowledge in Germany," Dresden Discussion Paper Series in Economics 03/12, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
    10. Miller, Margaret & Reichelstein, Julia & Salas, Christian & Zia, Bilal, 2014. "Can you help someone become financially capable ? a meta-analysis of the literature," Policy Research Working Paper Series 6745, The World Bank.
    11. Dick, Christian D. & Jaroszek, Lena M., 2013. "Knowing what not to do: Financial literacy and consumer credit choices," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 13-027, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Barrett, Alan & Mosca, Irene & Whelan, Brendan J., 2013. "(Lack of) Pension Knowledge," IZA Discussion Papers 7596, Institute for the Study of Labor (IZA).
    13. Fernando Alexandre & Luís Aguiar Conraria & Pedro Bação & Miguel Portela, 2011. "A Poupança em Portugal," GEMF Working Papers 2011-19, GEMF - Faculdade de Economia, Universidade de Coimbra.
    14. Paul Gerrans & Craig Speelman & Guillermo Campitelli, 2014. "The Relationship Between Personal Financial Wellness and Financial Wellbeing: A Structural Equation Modelling Approach," Journal of Family and Economic Issues, Springer, Springer, vol. 35(2), pages 145-160, June.

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