Financial Literacy: Do People Know the ABCs of Finance?

Global Financial Literacy Excellence Center Working Paper No. 2014-9

25 Pages Posted: 27 Mar 2015

See all articles by Annamaria Lusardi

Annamaria Lusardi

George Washington University - Department of Accountancy; National Bureau of Economic Research (NBER)

Date Written: November 30, 2014

Abstract

Increasingly, individuals are in charge of their own financial security and are confronted with ever more complex financial instruments. However, there is evidence that many individuals are not well-equipped to make sound saving decisions. This paper looks at financial literacy, which is defined as the ability to process economic information and make informed decisions about financial planning, wealth accumulation, debt, and pensions. Failure to plan for retirement, lack of participation in the stock market, and poor borrowing behavior can all be linked to ignorance of basic financial concepts. Financial literacy impacts financial decision-making, with implications that apply to individuals, communities, countries, and society as a whole. Given the lack of financial literacy among the population, it may be important to remedy it by adding financial literacy to the school curriculum.

Keywords: financial literacy

JEL Classification: D91

Suggested Citation

Lusardi, Annamaria, Financial Literacy: Do People Know the ABCs of Finance? (November 30, 2014). Global Financial Literacy Excellence Center Working Paper No. 2014-9. Available at SSRN: https://ssrn.com/abstract=2585246 or http://dx.doi.org/10.2139/ssrn.2585246

Annamaria Lusardi (Contact Author)

George Washington University - Department of Accountancy ( email )

George Washington University School of Business
Washington, DC 20052
United States

HOME PAGE: http://business.gwu.edu/profiles/annamaria-lusardi/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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