Financial Literacy and Financial Sophistication in the Older Population: Evidence from the 2008 HRS

33 Pages Posted: 26 Nov 2009

See all articles by Olivia S. Mitchell

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; University of Pennsylvania - The Wharton School, Pension Research Council; National Bureau of Economic Research (NBER)

Vilsa Curto

National Bureau of Economic Research (NBER)

Annamaria Lusardi

Stanford University - Stanford Institute for Economic Policy Research

Date Written: September 1, 2009

Abstract

This paper analyzes new data on financial literacy and financial sophistication from the 2008 Health and Retirement Study. We show that financial literacy is lacking among older individuals and for the first time explore additional questions on financial sophistication which proves even scarcer. For this sample of older respondents over the age of 55, we find that people lack even a rudimentary understanding of stock and bond prices, risk diversification, portfolio choice, and investment fees. In view of the fact that individuals are increasingly required to take on responsibility for their own retirement security, this lack of knowledge has serious implications.

Suggested Citation

Mitchell, Olivia S. and Curto, Vilsa and Lusardi, Annamaria, Financial Literacy and Financial Sophistication in the Older Population: Evidence from the 2008 HRS (September 1, 2009). Michigan Retirement Research Center Research Paper No. 2009-216, Available at SSRN: https://ssrn.com/abstract=1513478 or http://dx.doi.org/10.2139/ssrn.1513478

Olivia S. Mitchell (Contact Author)

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

University of Pennsylvania - The Wharton School, Pension Research Council ( email )

3302 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vilsa Curto

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Annamaria Lusardi

Stanford University - Stanford Institute for Economic Policy Research ( email )

366 Galvez Street
John A. and Cynthia Fry Gunn Building
Stanford, CA CA 94305
United States

HOME PAGE: http://siepr.stanford.edu/people/annamaria-lusardi

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