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Financial Literacy among the Young: Evidence and Implications for Consumer Policy

Author

Listed:
  • Annamaria Lusardi

    () (Dartmouth College)

  • Olivia S. Mitchell

    () (The Wharton School, University of Pennsylvania)

  • Vilsa Curto

    () (NBER)

Abstract

We examined financial literacy among the young using data from the 1997 National Longitudinal Survey of Youth. We showed that financial literacy is low among the young; fewer than one-third of young adults possess basic knowledge of interest rates, inflation, and risk diversification. Financial literacy is strongly related to sociodemographic characteristics and family financial sophistication. Specifically, a college-educated male whose parents had stocks and retirement savings is about 50 percentage points more likely to know about risk diversification than a female with less than a high school education whose parents were not wealthy. These findings have implications for consumer policy.

Suggested Citation

  • Annamaria Lusardi & Olivia S. Mitchell & Vilsa Curto, 2009. "Financial Literacy among the Young: Evidence and Implications for Consumer Policy," CeRP Working Papers 91, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  • Handle: RePEc:crp:wpaper:91
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    Cited by:

    1. Bruhn, Miriam & de Souza Leao, Luciana & Legovini, Arianna & Marchetti, Rogelio & Zia, Bilal, 2013. "The impact of high school financial education : experimental evidence from Brazil," Policy Research Working Paper Series 6723, The World Bank.
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    6. Jappelli, Tullio & Padula, Mario, 2013. "Investment in financial literacy and saving decisions," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2779-2792.
    7. repec:wsi:qjfxxx:v:07:y:2017:i:03:n:s2010139217500082 is not listed on IDEAS
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    9. Yoshihiko Kadoya & Mostafa Saidur Rahim Khan, 2016. "What Determines Financial Literacy in Japan?," ISER Discussion Paper 0982, Institute of Social and Economic Research, Osaka University.
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    11. Klapper, Leora & Lusardi, Annamaria & Panos, Georgios A., 2013. "Financial literacy and its consequences: Evidence from Russia during the financial crisis," Journal of Banking & Finance, Elsevier, vol. 37(10), pages 3904-3923.
    12. Annamaria Lusardi & Olivia S. Mitchell, 2017. "How Ordinary Consumers Make Complex Economic Decisions: Financial Literacy and Retirement Readiness," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 1-31, September.
    13. Judith Scott-Clayton, 2012. "Information Constraints and Financial Aid Policy," NBER Working Papers 17811, National Bureau of Economic Research, Inc.
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    15. Binswanger, J. & Carman, K.G., 2010. "The Miracle of Compound Interest : Does our Intuition Fail?," Discussion Paper 2010-137, Tilburg University, Center for Economic Research.
    16. M. A. Milioli & L. Poletti & B. Ronchini, 2011. "L’educazione finanziaria degli studenti universitari: misurazione e analisi delle determinanti," Economics Department Working Papers 2011-EF01, Department of Economics, Parma University (Italy).
    17. Lalime, Thomas & Michaud, Pierre-Carl, 2014. "Littératie financière et préparation à la retraite au Québec et dans le reste du Canada," L'Actualité Economique, Société Canadienne de Science Economique, vol. 90(1), pages 23-45, Mars.
    18. Anderson, Laurel & Ostrom, Amy L. & Corus, Canan & Fisk, Raymond P. & Gallan, Andrew S. & Giraldo, Mario & Mende, Martin & Mulder, Mark & Rayburn, Steven W. & Rosenbaum, Mark S. & Shirahada, Kunio & W, 2013. "Transformative service research: An agenda for the future," Journal of Business Research, Elsevier, vol. 66(8), pages 1203-1210.
    19. Joanne W. Hsu, 2011. "Aging and Strategic Learning: The Impact of Spousal Incentives on Financial Literacy," NFI Working Papers 2011-WP-06, Indiana State University, Scott College of Business, Networks Financial Institute.
    20. Alfonso Arellano & Noelia Camara & David Tuesta, 2014. "The effect of self-confidence on financial literacy," Working Papers 1428, BBVA Bank, Economic Research Department.
    21. Angela Hung & Joanne Yoong & Elizabeth Brown, 2012. "Empowering Women Through Financial Awareness and Education," OECD Working Papers on Finance, Insurance and Private Pensions 14, OECD Publishing.
    22. Annamaria Lusardi & Olivia S. Mitchell & Vilsa Curto, 2009. "Financial Literacy and Financial Sophistication Among Older Americans," NBER Working Papers 15469, National Bureau of Economic Research, Inc.
    23. Washington Macías & Shirley Espinoza & Lisset Gutiérrez & Regina Rodríguez, 2015. "Students’ perceived risk and investment intention: the effect of brand equity," Management & Marketing, De Gruyter Open, vol. 10(3), pages 208-225, October.

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    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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