The Economic Importance of Financial Literacy: Theory and Evidence
This paper undertakes an assessment of a rapidly growing body of economic research on financial literacy. It gives an overview of theoretical research, draws on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision making in the United States and elsewhere. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy.