San Francisco, CA
NBER Working Papers and Publications
|July 2015||Precautionary Savings, Retirement Planning and Misperceptions of Financial Literacy|
with Anders Anderson, David T. Robinson: w21356
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.
Published: Anders Anderson & Forest Baker & David T. Robinson, 2017. "Precautionary savings, retirement planning and misperceptions of financial literacy," Journal of Financial Economics, .