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The long-term impact of financial literacy on wealth: Evidence from longitudinal data

Author

Listed:
  • De Beckker, Kenneth
  • Frijns, Bart
  • Hubers, Frank
  • Derkx, Sjuul

Abstract

This paper investigates the long-term impact of financial literacy on wealth accumulation using unique longitudinal data on Dutch households, thereby resolving important endogeneity issues that plague cross-sectional analyses. We find that financial literacy significantly influences income and savings, driving wealth accumulation over time. The effects vary by age: younger individuals with higher financial literacy tend to earn more, whereas older individuals prioritize savings. Additionally, we identify a notable gender disparity, where financial literacy significantly influences wealth accumulation for men, but has no significant impact for women.

Suggested Citation

  • De Beckker, Kenneth & Frijns, Bart & Hubers, Frank & Derkx, Sjuul, 2025. "The long-term impact of financial literacy on wealth: Evidence from longitudinal data," Economics Letters, Elsevier, vol. 257(C).
    • Handle: RePEc:eee:ecolet:v:257:y:2025:i:c:s0165176525005191
    DOI: 10.1016/j.econlet.2025.112682
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • I20 - Health, Education, and Welfare - - Education - - - General
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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