Abstract

http://ssrn.com/abstract=1918669
 
 

References (74)



 
 

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Financial Literacy, Retirement Planning, and Household Wealth


Maarten Van Rooij


De Nederlandsche Bank; Netspar

Annamaria Lusardi


The George Washington University School of Business; National Bureau of Economic Research (NBER)

Rob J.M. Alessie


University of Groningen; Netspar; Tilburg University - Center for Economic Research (CentER)

August 2011

NBER Working Paper No. w17339

Abstract:     
There is ample empirical evidence documenting widespread financial illiteracy and limited pension knowledge. At the same time, the distribution of wealth is widely dispersed and many workers arrive on the verge of retirement with few or no personal assets. In this paper, we investigate the relationship between financial literacy and household net worth, relying on comprehensive measures of financial knowledge designed for a special module of the Dutch Central Bank Household Survey (DHS). Our findings provide evidence of a strong positive association between financial literacy and net worth, even after controlling for many determinants of wealth. Moreover, we discuss two channels through which financial literacy might facilitate wealth accumulation. First, financial knowledge increases the likelihood of investing in the stock market, allowing individuals to benefit from the equity premium. Second, financial literacy is positively related to retirement planning, and the development of a savings plan has been shown to boost wealth. Overall, financial literacy, both directly and indirectly, is found to have a strong link to household wealth.

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Number of Pages in PDF File: 41

working papers series


Date posted: August 29, 2011  

Suggested Citation

Van Rooij, Maarten and Lusardi, Annamaria and Alessie, Rob J.M., Financial Literacy, Retirement Planning, and Household Wealth (August 2011). NBER Working Paper No. w17339. Available at SSRN: http://ssrn.com/abstract=1918669

Contact Information

Maarten Van Rooij (Contact Author)
De Nederlandsche Bank ( email )
P.O. Box 98
Amsterdam, 1000 AB
Netherlands
HOME PAGE: http://www.dnb.nl/dnb/home/research/researchers/personal_pages/en/47-150127.html

Netspar ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Annamaria Lusardi
The George Washington University School of Business ( email )
School of Business and Public Management
Washington, DC 20052
United States
HOME PAGE: http://business.gwu.edu/faculty/annamaria_lusardi.cfm
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Rob J.M. Alessie
University of Groningen ( email )
P.O. box 800
9700 AV Groningen
Netherlands
050-3637240 (Phone)
HOME PAGE: http://members.chello.nl/~r.j.m.alessie
Netspar
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
HOME PAGE: http://www.netspar.nl
Tilburg University - Center for Economic Research (CentER)
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
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Paper statistics
Abstract Views: 237
Downloads: 15
References:  74
Citations:  13
Footnotes:  20

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