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Household saving behavior: The role of literacy, information and financial education programs

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  • Lusardi, Annamaria
Abstract
Individuals are increasingly in charge of their own financial security after retirement. But how well-equipped are individuals to make saving decisions; do they possess adequate financial literacy, are they informed about the most important components of saving plans, do they even plan for retirement? This paper shows that financial illiteracy is widespread among the US population and particularly acute among specific demographic groups, such as those with low education, women, African-Americans and Hispanics. Moreover, close to half of older workers do not know which type of pensions they have and the large majority of workers know little about the rules governing Social Security benefits. Lack of literacy and lack of information can affect the ability to save and to secure a comfortable retirement; few individuals rely on the help of financial advisors and ignorance about basic financial concepts can be linked to lack of retirement planning and lack of wealth. Financial education programs can help improve saving and financial decision-making, but much more can be done to improve the effectiveness of these programs.

Suggested Citation

  • Lusardi, Annamaria, 2007. "Household saving behavior: The role of literacy, information and financial education programs," CFS Working Paper Series 2007/28, Center for Financial Studies (CFS).
    • Handle: RePEc:zbw:cfswop:200728
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    References listed on IDEAS

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    Cited by:

    1. Bruce Ian Carlin & David T. Robinson, 2012. "What Does Financial Literacy Training Teach Us?," The Journal of Economic Education, Taylor & Francis Journals, vol. 43(3), pages 235-247, July.
    2. Annamaria Lusardi & Olivia S. Mitchell, 2017. "How Ordinary Consumers Make Complex Economic Decisions: Financial Literacy and Retirement Readiness," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 1-31, September.
    3. Nikolaos Satsios & Spyros Hadjidakis & Ioannis Sotiropoulos & Nicholas Tsounis, 2020. "Religiosity and Intention towards Saving of a Muslim Minority in Greece," Asian Culture and History, Canadian Center of Science and Education, vol. 12(1), pages 1-28, March.
    4. Annamaria Lusardi, 2008. "Increasing the Effectiveness of Financial Education in the Workplace," CeRP Working Papers 79, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    5. Habila, Murna, 2015. "Influence of Financial Education on Retirement Security: Evidence from the state of Illinois," MPRA Paper 73988, University Library of Munich, Germany, revised 05 Jun 2016.
    6. Agarwal, Sumit & Amromin, Gene & Ben-David, Itzhak & Chomsisengphet, Souphala & Evanoff, Douglas D., 2008. "The Effects of Mandated Financial Counseling on Household Mortgage Decisions: Evidence from a Natural Experiment," Working Paper Series 2008-20, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    7. Tae-young Pak & Swarnankur Chatterjee, 2016. "Savings Decisions of American Households: The Roles of Financial Literacy and Financial Practice," Economics Bulletin, AccessEcon, vol. 36(3), pages 1486-1496.
    8. Trinh Xuan Thi Nguyen & Sumeet Lal & Sulemana Abdul-Salam & Mostafa Saidur Rahim Khan & Yoshihiko Kadoya, 2022. "Financial Literacy, Financial Education, and Cancer Screening Behavior: Evidence from Japan," IJERPH, MDPI, vol. 19(8), pages 1-17, April.

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    More about this item

    Keywords

    Financial Literacy; Financial Education Programs; Saving Behavior; Pensions;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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