The Pension Research Council has a new Special Issue on financial literacy in the Journal of Pension Economics and Finance, and it is now posted online. The introduction and first chapter are by PRC Executive Director Olivia S. Mitchell and Financial Literacy Center Director Annamaria Lusardi. Other chapters cover Italy, Germany, India, the Netherlands, Sweden, Russia, Japan, and New Zealand. In addition comparative analysis includes studies on financial literacy in Armenia, the Czech Republic, Estonia, Hungary, Ireland, Malaysia, Peru, Poland, UK, and South Africa, as well as Norway.
This volume offers a new understanding of the causes and consequences of financial illiteracy around the world. It shows that financial literacy is very low irrespective of the level of financial market development and the type of pension provision. What this means is that changes in global financial markets have apparently not wrought enhancements in financial knowledge. There are also important sex and age differences common across countries: women uniformly know less – and they know they know less – than do men in terms of financial knowledge. Low levels of financial knowledge in older populations also suggest that these groups may be particularly vulnerable.
This set of studies makes it clear that financial literacy cannot be taken for granted, even in countries with developed financial markets. Indeed, as the long-term shift continues toward individual responsibility for retirement saving, investment, and wealth decumulation after retirement, it is critically important to evaluate which programs can best help people make good financial decisions. Finally, to be effective, financial education programs would be most effective if they are targeted to different population subgroups. In sum, around the world, financial literacy is critical to retirement security.
The entire table of contents appears at: http://journals.cambridge.org/action/displayIssue?jid=PEF&tab=currentissue. All the chapters can be downloaded for free.
The Wharton School
