MEA research news - financial literacy

Dr. Tabea Bucher-Koenen of MEA has developed a three-item-test that helps to examine the financial know-how of women in Germany and in international comparison. In this test, female and male respondents were asked to answer questions about interests, the interaction of interests and inflation as well as risks in asset-management. On average, women performed worse in this test than men, irrespective of age, thus creating a knowledge gap between women and men.

The recent financial downturn and economic crisis provided a major challenge for financial institutions, politicians, and companies around the world. In this context, it is of major importance to analyse how private households were affected by the crisis, how they reacted to such a shock and what the long-term consequences will be. One central question is whether households with higher financial literacy were better at protecting themselves from the effects of the financial and economic crisis.

Private old-age provision is growing increasingly important in times of demographic change and mounting strains on the public pension system. For many individuals in Germany the “need” to save for old-age in addition to the state pension is new and households seem to face difficulties saving for old age due to the high complexity and the large variety of old-age savings contracts. Therefore, it is important to evaluate who saves and who does not and whether this decision is related to financial knowledge of individuals.