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Can financial literacy reduce anxiety about life in old age?

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  • Yoshihiko Kadoya
  • Mostafa Saidur Rahim Khan

Abstract

This study examines the role of financial literacy in reducing anxiety about life in old age. We hypothesize that financial literacy increases preparedness for old age through better savings and investment decisions, leading to the accumulation of more assets and earning more income, which enhances financial capacity and reduces anxiety. Using data from a nationwide panel survey in Japan, we provide evidence that financial literacy can reduce anxiety about life in old age by making people capable of accumulating more assets and earning more income. Moreover, the interaction of financial literacy with age and spouse reduces anxiety, while living with children increases anxiety about life during old age. We check the robustness of our results using an alternative measure of financial literacy, changing composition of the sample, controlling for residents’ geographical dispersion, and testing for endogeneity bias. The major findings remain unchanged after considering these factors.

Suggested Citation

  • Yoshihiko Kadoya & Mostafa Saidur Rahim Khan, 2018. "Can financial literacy reduce anxiety about life in old age?," Journal of Risk Research, Taylor & Francis Journals, vol. 21(12), pages 1533-1550, December.
    • Handle: RePEc:taf:jriskr:v:21:y:2018:i:12:p:1533-1550
    DOI: 10.1080/13669877.2017.1313760
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    1. Shunsuke Ono & Pattaphol Yuktadatta & Takafumi Taniguchi & Tomoe Iitsuka & Masafumi Noguchi & Sawa Tanaka & Haruka Ito & Kousei Nakamura & Nanako Yasuhara & Chihiro Miyawaki & Katsumi Mikura & Mostafa, 2021. "Financial Literacy and Exercise Behavior: Evidence from Japan," Sustainability, MDPI, vol. 13(8), pages 1-15, April.
    2. Kuti, Mónika & Schepp, Zoltán, 2020. "Aging Society and Attitude to Risk," Public Finance Quarterly, Corvinus University of Budapest, vol. 65(4), pages 457-471.
    3. Gilles E. Gignac & Elizabeth Ooi, 2022. "Measurement error in research on financial literacy: How much error is there and how does it influence effect size estimates?," Journal of Consumer Affairs, Wiley Blackwell, vol. 56(2), pages 938-956, June.
    4. Sekita, Shizuka & Kakkar, Vikas & Ogaki, Masao, 2022. "Wealth, Financial Literacy and Behavioral Biases in Japan: the Effects of Various Types of Financial Literacy," Journal of the Japanese and International Economies, Elsevier, vol. 64(C).
    5. Mostafa Saidur Rahim Khan & Trinh Xuan Thi Nguyen & Sumeet Lal & Somtip Watanapongvanich & Yoshihiko Kadoya, 2022. "Hesitancy towards the Third Dose of COVID-19 Vaccine among the Younger Generation in Japan," IJERPH, MDPI, vol. 19(12), pages 1-13, June.
    6. Yoshihiko Kadoya & Naheed Rabbani & Mostafa Saidur Rahim Khan, 2022. "Insurance literacy among older people in Japan: The role of socio‐economic status," Journal of Consumer Affairs, Wiley Blackwell, vol. 56(2), pages 788-805, June.
    7. Yoshihiko Kadoya & Mostafa Saidur Rahim Khan & Tomomi Yamane, 2020. "Government’s Stimulus Program to Boost Consumer Spending: A Case of Discount Shopping Coupon Scheme in Japan," Sustainability, MDPI, vol. 12(9), pages 1-12, May.
    8. Morshadul Hasan & Thuhid Noor & Jiechao Gao & Muhammad Usman & Mohammad Zoynul Abedin, 2023. "Rural Consumers’ Financial Literacy and Access to FinTech Services," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 780-804, June.
    9. Kadoya, Yoshihiko & Khan, Mostafa Saidur Rahim, 2020. "What determines financial literacy in Japan?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 19(3), pages 353-371, July.
    10. Yoshihiko Kadoya & Mostafa Saidur Rahim Khan, 2020. "Financial Literacy in Japan: New Evidence Using Financial Knowledge, Behavior, and Attitude," Sustainability, MDPI, vol. 12(9), pages 1-15, May.
    11. Fujiki, Hiroshi, 2020. "Cash demand and financial literacy: A case study using Japanese survey data," Japan and the World Economy, Elsevier, vol. 54(C).
    12. Mostafa Saidur Rahim Khan & Pattaphol Yuktadatta & Yoshihiko Kadoya, 2022. "Who Became Lonely during the COVID-19 Pandemic? An Investigation of the Socioeconomic Aspects of Loneliness in Japan," IJERPH, MDPI, vol. 19(10), pages 1-18, May.
    13. Mostafa Saidur Rahim Khan & Naheed Rabbani & Yoshihiko Kadoya, 2021. "Can Financial Literacy Explain Lack of Investment in Risky Assets in Japan?," Sustainability, MDPI, vol. 13(22), pages 1-12, November.
    14. Mostafa Saidur Rahim Khan & Yoshihiko Kadoya, 2021. "Loneliness during the COVID-19 Pandemic: A Comparison between Older and Younger People," IJERPH, MDPI, vol. 18(15), pages 1-15, July.
    15. Yoshihiko Kadoya & Mostafa Saidur Rahim Khan & Tomomi Hamada & Alvaro Dominguez, 2018. "Financial literacy and anxiety about life in old age: evidence from the USA," Review of Economics of the Household, Springer, vol. 16(3), pages 859-878, September.
    16. repec:upd:utmpwp:011 is not listed on IDEAS
    17. Mostafa Saidur Rahim Khan & Yoshihiko Kadoya, 2023. "Who Became Victims of Financial Frauds during the COVID-19 Pandemic in Japan?," Sustainability, MDPI, vol. 15(4), pages 1-17, February.
    18. Vitor Leone & Piers Thompson, 2024. "Financial literacy and advice perceptions among UK higher education students: an ethnicity tale?," Review of Economics of the Household, Springer, vol. 22(2), pages 709-781, June.
    19. Mostafa Saidur Rahim Khan & Pongpat Putthinun & Somtip Watanapongvanich & Pattaphol Yuktadatta & Md. Azad Uddin & Yoshihiko Kadoya, 2021. "Do Financial Literacy and Financial Education Influence Smoking Behavior in the United States?," IJERPH, MDPI, vol. 18(5), pages 1-18, March.
    20. Long She & Ratneswary Rasiah & Marc Arul Weissmann & Harpaljit Kaur, 2024. "Using the Theory of Planned Behaviour to Explore Predictors of Financial Behaviour Among Working Adults in Malaysia," FIIB Business Review, , vol. 13(1), pages 118-135, January.
    21. Edouard Ribes, 2022. "What are the financial implications of an ageing population for European citizens?," Working Papers hal-03118783, HAL.
    22. Khurram Rehman & Md Aslam Mia, 2024. "Determinants of financial literacy: a systematic review and future research directions," Future Business Journal, Springer, vol. 10(1), pages 1-25, December.
    23. Hiroshi Fujiki, 2020. "Empirical Analysis on Understanding of Financial Products," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 16(7), pages 1-25, October.
    24. Pongpat Putthinun & Somtip Watanapongvanich & Mostafa Saidur Rahim Khan & Yoshihiko Kadoya, 2021. "Financial Literacy and Alcohol Drinking Behavior: Evidence from Japan," Sustainability, MDPI, vol. 13(16), pages 1-13, August.
    25. Trinh Xuan Thi Nguyen & Sumeet Lal & Sulemana Abdul-Salam & Mostafa Saidur Rahim Khan & Yoshihiko Kadoya, 2022. "Financial Literacy, Financial Education, and Cancer Screening Behavior: Evidence from Japan," IJERPH, MDPI, vol. 19(8), pages 1-17, April.

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