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Financial literacy among the young: Evidence and implications for consumer policy

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Listed author(s):
  • Lusardi, Annamaria
  • Mitchell, Olivia S.
  • Curto, Vilsa

Abstract

We examined financial literacy among the young using the most recent wave of the 1997 National Longitudinal Survey of Youth. We showed that financial literacy is low; fewer than one-third of young adults possess basic knowledge of interest rates, inflation, and risk diversification. Financial literacy was strongly related to sociodemographic characteristics and family financial sophistication. Specifically, a college-educated male whose parents had stocks and retirement savings was about 45 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.

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File URL: https://www.econstor.eu/bitstream/10419/43224/1/630563187.pdf
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Paper provided by Center for Financial Studies (CFS) in its series CFS Working Paper Series with number 2010/09.

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Date of creation: 2010
Handle: RePEc:zbw:cfswop:201009
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Keywords: Financial Knowledge; Peer Effects; Family Background;

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Find related papers by JEL classification:
  • D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving

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  1. James J. Choi & David Laibson & Brigitte C. Madrian, 2005. "Reducing the Complexity Costs of 401(k) Participation Through Quick Enrollment(TM)," Levine's Bibliography 122247000000000966, UCLA Department of Economics.
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  19. Justine S. Hastings & Lydia Tejeda-Ashton, 2008. "Financial Literacy, Information, and Demand Elasticity: Survey and Experimental Evidence from Mexico," NBER Working Papers 14538, National Bureau of Economic Research, Inc.
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