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Financial Literacy and Retirement Planning in Germany

Author

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  • Tabea Bucher-Koenen
  • Annamaria Lusardi

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.

Suggested Citation

  • Tabea Bucher-Koenen & Annamaria Lusardi, 2011. "Financial Literacy and Retirement Planning in Germany," NBER Working Papers 17110, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:17110
    Note: AG
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    References listed on IDEAS

    as
    1. Axel Börsch-Supan & Lothar Essig, 2003. "Stockholding in Germany," Palgrave Macmillan Books, in: Luigi Guiso & Michael Haliassos & Tullio Jappelli (ed.), Stockholding in Europe, chapter 5, pages 110-138, Palgrave Macmillan.
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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