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Researchers : Financial Literacy: An Essential Tool for Informed Consumer Choice?
Complete Description:Increasingly, individuals are in charge of their own financial security and are confronted with ever more complex financial instruments. However, there is evidence that many individuals are not well-equipped to make sound saving decisions. This paper demonstrates widespread financial illiteracy among the U.S. population, particularly among specific demographic groups. Those with low education, women, African-Americans, and Hispanics display particularly low levels of literacy. Financial literacy impacts financial decision-making. Failure to plan for retirement, lack of participation in the stock market, and poor borrowing behavior can all be linked to ignorance of basic financial concepts. While financial education programs can result in improved saving behavior and financial decision-making, much can be done to improve these programs’ effectiveness.
Date Published:Sunday, June 1, 2008
Author:Annamaria Lusardi
Funding Agency: Board of Governors of the Federal Reserve System, Dartmouth
Type: Working paper;
Source: Survey data;
Language: English
Audience: Researcher