nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2017‒10‒15
three papers chosen by

  1. Can Knowledge Empower Women to Save More for Retirement? By Drew M. Anderson; J. Michael Collins
  2. Skilled but unaware of it: Occurrence and potential long-term effects of females' financial underconfidence By Bannier, Christina E.; Schwarz, Milena
  3. Does Financial Literacy Improve Financial Inclusion? Cross Country Evidence By Klühs, Theres; Grohmann, Antonia; Menkhoff, Lukas

  1. By: Drew M. Anderson; J. Michael Collins
    Abstract: Retirement-account balances are lower among women than men. This study assesses the role of financial knowledge and empowerment in contributing to the gender gap in savings. We evaluate the effects of financial education delivered to women in the workplace, using administrative data on 31,000 public-sector workers in Wisconsin. All of these workers participated in a mandatory defined-benefit pension plan, but 47 percent also participated in a deferred compensation savings instrument provided by their employer, with the median participant contributing 1.6 percent of earnings each month. In a triple-difference strategy, we compare the progression of gender gaps in savings over time at state agencies that implemented financial education with the group that did not. We estimate that a multi-media education effort increased participation in retirement savings by 2.6 percentage points, closing the gender gap by more than half. This result is partially explained by pre-existing trends. The education program operated at low marginal cost and is likely to be portable to other contexts.
    Date: 2017–09
  2. By: Bannier, Christina E.; Schwarz, Milena
    Abstract: We find strong gender- and education-related differences in the distribution of actual and perceived financial sophistication: Whereas financial literacy rises in formal education, confidence increases in education for men but decreases for women. We show that the financial decisions of highly-educated men benefit strongly from this excess confidence, while the underconfidence of highly-educated women, in contrast, impairs their long-term financial planning.
    JEL: D91 G11 D83 J26
    Date: 2017
  3. By: Klühs, Theres; Grohmann, Antonia; Menkhoff, Lukas
    Abstract: We study the effect of financial literacy on financial inclusion at the cross country level. Financial literacy is strongly related to higher financial inclusion (i.e. access and use of fin. services) and IV-regressions support a causal interpretation.Studying heterogeneous effects of financial literacy across countries shows that the marginal effect of financial literacy on financial inclusion is largest in countries with lower income, a less developed financial sector, and fewer bank branches.
    JEL: G21 O1 E44
    Date: 2017

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