Wharton Pension Research Council Working Papers

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Working Paper

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The present paper introduces a new dataset, the Rand American Life Panel (ALP), which offers several appealing features for an analysis of financial literacy and retirement planning. It allows us to evaluate financial knowledge during workers’ prime earning years when they are making key financial decisions, and it offers detailed financial literacy and retirement planning questions, permitting a finer assessment of respondents’ financial literacy than heretofore feasible. We can also compare respondents’ self-assessed financial knowledge levels with objective measures of financial literacy, and most valuably, we can investigate prior financial training which permits us to identify key causal links. By every measure, and in every sample we examine, financial literacy proves to be a key determinant of retirement planning. We also find that respondent literacy is higher when they were exposed to economics in school and to company-based financial education programs.


financial literacy, retirement planning, decisionmaking

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Copyright/Permission Statement

Opinions and errors are solely those of the authors and not of the institutions with whom the authors are affiliated. All findings, interpretations, and conclusions of this paper represent the views of the author(s) and not those of the Wharton School or the Pension Research Council. © 2007 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


The research reported herein was pursuant to a grant from the US Social Security Administration (SSA) funded as part of the Retirement Research Consortium (RRC) and the Pension Research Council at the Wharton School. We would like to thank Rob Alessie, Sandy Chien, Jeff Dominitz, Arie Kapteyn, and Joanne Yoong for suggestions and help with the data. Special thanks go to Arthur van Soest for his help in devising the financial literacy questions. Yuni Yan provided excellent research assistance.

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Economics Commons



Date Posted: 16 December 2019