Precautionary Savings, Retirement Planning and Misperceptions of Financial Literacy

44 Pages Posted: 13 Jul 2015

See all articles by Anders Anderson

Anders Anderson

Swedish House of Finance

Forest Baker

LinkedIn Corporation

David T. Robinson

Fuqua School of Business, Duke University; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Multiple version iconThere are 2 versions of this paper

Date Written: July 2015

Abstract

We measure financial literacy among LinkedIn members, complementing standard questions with additional questions that allow us to gauge self-perceptions of financial literacy. Average financial literacy is surprisingly low given the demographics of our sample: fewer than two-thirds of CFOs, CEOs, and COOs complete the test correctly. Financial literacy, precautionary savings and retirement planning are positively correlated, but this is mostly driven by perceived, not actual, literacy: controlling for self-perceptions, actual literacy has low predictive power. Perceptions drive decision-making among low-literacy respondents and are associated with mistaken beliefs about financial products and less willingness to accept financial advice.

Suggested Citation

Anderson, Anders and Baker, Forest and Robinson, David T., Precautionary Savings, Retirement Planning and Misperceptions of Financial Literacy (July 2015). NBER Working Paper No. w21356, Available at SSRN: https://ssrn.com/abstract=2629963

Anders Anderson (Contact Author)

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Forest Baker

LinkedIn Corporation ( email )

2029 Stierlin Ct
Mountain View, CA
United States
+1-415-970 5166 (Phone)

David T. Robinson

Fuqua School of Business, Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0120
United States
919-660-8023 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
25
Abstract Views
517
PlumX Metrics