(This abstract was borrowed from another version of this item.)"> (This abstract was borrowed from another version of this item.)">
[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/bla/ecinqu/v55y2017i1p248-259.html
   My bibliography  Save this article

Employee Financial Literacy And Retirement Plan Behavior: A Case Study

Author

Listed:
  • Robert Clark
  • Annamaria Lusardi
  • Olivia S. Mitchell
Abstract
This paper uses administrative data on all active employees of the Federal Reserve System to examine participation in and contributions to the Thrift Saving Plan, the system’s defined contribution (DC) plan. We have appended to the administrative records a unique employee survey of economic/demographic factors including a set of financial literacy questions. Not surprisingly, Federal Reserve employees are more financially literate than the general population; furthermore, the most financially savvy are also most likely to participate in and contribute the most to their plan. Sophisticated workers contribute three percentage points more of their earnings to the DC plan than do the less knowledgeable, and they hold more equity in their pension accounts. Finally, we examine changes in employee plan behavior a year after the financial literacy survey and compare it to the baseline. We find that employees who completed an educational module were more likely to start contributing and less likely to have stopped contributing to the DC plan post-survey.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Robert Clark & Annamaria Lusardi & Olivia S. Mitchell, 2017. "Employee Financial Literacy And Retirement Plan Behavior: A Case Study," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 248-259, January.
    • Handle: RePEc:bla:ecinqu:v:55:y:2017:i:1:p:248-259
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/ecin.12389
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert L. Clark & Melinda Sandler Morrill & Steven G. Allen, 2012. "The Role Of Financial Literacy In Determining Retirement Plans," Economic Inquiry, Western Economic Association International, vol. 50(4), pages 851-866, October.
    2. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    3. Annamaria Lusardi & Olivia S. Mitchell, 2008. "Planning and Financial Literacy: How Do Women Fare?," American Economic Review, American Economic Association, vol. 98(2), pages 413-417, May.
    4. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy and retirement planning in the United States," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 509-525, October.
    5. repec:wly:soecon:v:80:3:y:2014:p:677-701 is not listed on IDEAS
    6. Cattaneo, Matias D., 2010. "Efficient semiparametric estimation of multi-valued treatment effects under ignorability," Journal of Econometrics, Elsevier, vol. 155(2), pages 138-154, April.
    7. 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.
    8. Annamaria Lusardi & Olivia S Mitchelli, 2007. "Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 42(1), pages 35-44, January.
    9. Patrick J. Bayer & B. Douglas Bernheim & John Karl Scholz, 2009. "The Effects Of Financial Education In The Workplace: Evidence From A Survey Of Employers," Economic Inquiry, Western Economic Association International, vol. 47(4), pages 605-624, October.
    10. Annamaria Lusardi & Olivia Mitchell, 2006. "Financial Literacy and Retirement Preparedness: Evidence and Implications for Financial Education Programs," Working Papers wp144, University of Michigan, Michigan Retirement Research Center.
    11. Curtis J. Simon & John T. Warner & Saul Pleeter, 2015. "Discounting, Cognition, And Financial Awareness: New Evidence From A Change In The Military Retirement System," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 318-334, January.
    12. Lusardi, Annamaria & Mitchell, Olivia S., 2011. "Financial literacy around the world: an overview," Journal of Pension Economics and Finance, Cambridge University Press, vol. 10(4), pages 497-508, October.
    13. Robert L. Clark & Melinda Sandler Morrill & Steven G. Allen, 2012. "Effectiveness of Employer-Provided Financial Information: Hiring to Retiring," American Economic Review, American Economic Association, vol. 102(3), pages 314-318, May.
    14. CLARK, ROBERT L. & d'AMBROSIO, MADELEINE B. & McDERMED, ANN A. & SAWANT, KSHAMA, 2006. "Retirement plans and saving decisions: the role of information and education," Journal of Pension Economics and Finance, Cambridge University Press, vol. 5(1), pages 45-67, March.
    15. Annamaria Lusardi & Pierre-Carl Michaud & Olivia S. Mitchell, 2017. "Optimal Financial Knowledge and Wealth Inequality," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 431-477.
    16. Steven G. Allen & Robert L. Clark & Jennifer Maki & Melinda Sandler Morrill, 2013. "Golden Years or Financial Fears? Decision Making After Retirement Seminars," NBER Working Papers 19231, National Bureau of Economic Research, Inc.
    17. Bernheim, B. Douglas & Garrett, Daniel M., 2003. "The effects of financial education in the workplace: evidence from a survey of households," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1487-1519, August.
    18. Matias D. Cattaneo, 2010. "multi-valued treatment effects," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
    19. Clark, Robert & Lusardi, Annamaria & Mitchell, Olivia S., 2017. "Financial knowledge and 401(k) investment performance: a case study," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(3), pages 324-347, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lusardi, Annamaria & Michaud, Pierre-Carl & Mitchell, Olivia S., 2020. "Assessing the impact of financial education programs: A quantitative model," Economics of Education Review, Elsevier, vol. 78(C).
    2. Oscar A. Stolper & Andreas Walter, 2017. "Financial literacy, financial advice, and financial behavior," Journal of Business Economics, Springer, vol. 87(5), pages 581-643, July.
    3. Shen, Chung-Hua & Lin, Shih-Jie & Tang, De-Piao & Hsiao, Yu-Jen, 2016. "The relationship between financial disputes and financial literacy," Pacific-Basin Finance Journal, Elsevier, vol. 36(C), pages 46-65.
    4. Lin, Chaonan & Hsiao, Yu-Jen & Yeh, Cheng-Yung, 2017. "Financial literacy, financial advisors, and information sources on demand for life insurance," Pacific-Basin Finance Journal, Elsevier, vol. 43(C), pages 218-237.
    5. Azra Zaimovic & Anes Torlakovic & Almira Arnaut-Berilo & Tarik Zaimovic & Lejla Dedovic & Minela Nuhic Meskovic, 2023. "Mapping Financial Literacy: A Systematic Literature Review of Determinants and Recent Trends," Sustainability, MDPI, vol. 15(12), pages 1-30, June.
    6. Kadoya, Yoshihiko & Khan, Mostafa Saidur Rahim, 2020. "What determines financial literacy in Japan?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 19(3), pages 353-371, July.
    7. Margherita Fort & Francesco Manaresi & Serena Trucchi, 2016. "Adult financial literacy and households’ financial assets: the role of bank information policies," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 31(88), pages 743-782.
    8. Noemi Oggero & Maria Cristina Rossi & Elisa Ughetto, 2020. "Entrepreneurial spirits in women and men. The role of financial literacy and digital skills," Small Business Economics, Springer, vol. 55(2), pages 313-327, August.
    9. Feng, Xiangnan & Lu, Bin & Song, Xinyuan & Ma, Shuang, 2019. "Financial literacy and household finances: A Bayesian two-part latent variable modeling approach," Journal of Empirical Finance, Elsevier, vol. 51(C), pages 119-137.
    10. Billari, Francesco C. & Favero, Carlo A. & Saita, Francesco, 2023. "Online financial and demographic education for workers: Experimental evidence from an Italian Pension Fund," Journal of Banking & Finance, Elsevier, vol. 151(C).
    11. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    12. Yoshihiko Kadoya & Mostafa Saidur Rahim Khan, 2020. "Financial Literacy in Japan: New Evidence Using Financial Knowledge, Behavior, and Attitude," Sustainability, MDPI, vol. 12(9), pages 1-15, May.
    13. Yoshihiko Kadoya & Mostafa Saidur Rahim Khan & Tomomi Hamada & Alvaro Dominguez, 2018. "Financial literacy and anxiety about life in old age: evidence from the USA," Review of Economics of the Household, Springer, vol. 16(3), pages 859-878, September.
    14. Noviarini, Jelita & Coleman, Andrew & Roberts, Helen & Whiting, Rosalind H., 2023. "Financial literacy and retirees' resource allocation decisions in New Zealand," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    15. Jian Li & Alexis Meyer‐Cirkel, 2021. "Promoting financial literacy through a digital platform: A pilot study in Luxembourg," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 73-87, January.
    16. S. Ananda & Raghavendra Prasanna Kumar & Tamanna Dalwai, 2024. "Impact of financial literacy on savings behavior: the moderation role of risk aversion and financial confidence," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(3), pages 843-854, September.
    17. Silvia Mariela Méndez-Prado & Vanessa Rodriguez & Kevin Peralta-Rizzo & Patricia Everaert & Martin Valcke, 2023. "An Assessment Tool to Identify the Financial Literacy Level of Financial Education Programs Participants’ Executed by Ecuadorian Financial Institutions," Sustainability, MDPI, vol. 15(2), pages 1-24, January.
    18. Tabea Bucher-Koenen & Annamaria Lusardi & Rob Alessie & Maarten van Rooij, 2017. "How Financially Literate Are Women? An Overview and New Insights," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(2), pages 255-283, July.
    19. Li, Xiao, 2020. "When financial literacy meets textual analysis: A conceptual review," Journal of Behavioral and Experimental Finance, Elsevier, vol. 28(C).
    20. Kubitza, Christian & Hofmann, Annette & Steinorth, Petra, 2019. "Financial literacy and precautionary insurance," ICIR Working Paper Series 34/19, Goethe University Frankfurt, International Center for Insurance Regulation (ICIR).

    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecinqu:v:55:y:2017:i:1:p:248-259. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.