Financial literacy around the world: an overview

TLDR

Financial illiteracy is widespread worldwide, and in a risky, globalized marketplace, informed financial decisions are essential. Using instrumental‑variable estimates, the study finds that the impact of financial literacy on retirement planning is likely underestimated. Women, the young, and the old are less financially literate than men and middle‑aged adults, while higher education correlates with greater financial knowledge; financially literate individuals are more likely to plan for retirement, underscoring the global importance of financial literacy for retirement security.

Abstract

Abstract In an increasingly risky and globalized marketplace, people must be able to make well-informed financial decisions. New international research demonstrates that financial illiteracy is widespread in both well-developed and rapidly changing markets. Women are less financially literate than men, the young and the old are less financially literate than the middle-aged, and more educated people are more financially knowledgeable. Most importantly, the financially literate are more likely to plan for retirement. Instrumental variables estimates show that the effects of financial literacy on retirement planning tend to be underestimated. In sum, around the world, financial literacy is critical to retirement security.