Financial Literacy and Financial Planning in France

Abstract

How are people financially literate in France? We address this question using the PATER survey and following the Lusardi and Mitchell (2011c) approach. We find that some subpopulations are less financially literate than others: women, young and old people as well as less-educated people are more likely to face difficulties when dealing with fundamental financial concepts such as risk diversification, inflation and interest compounding. We also find some differences in financial knowledge depending on the political opinion of the respondents. Finally we show that these differences in financial knowledge are correlated with differences in the propensity to plan: people who score higher on the financial literacy questions are more likely to be engaged in the preparation of a clearly defined financial plan.

Keywords: Financial Literacy, Retirement Planning, Household Finance

JEL Classification: G11, D83, J26