The 2020 TIAA Institute-GFLEC Personal Finance Index: Demographic Variations

Financial literacy varies across demographic groups (Figure 7), consistent with variations identified in previous years of the P-Fin Index and other studies.10

• There is a 7-percentage point difference between men and women in correctly answered P-Fin Index questions. This difference is highly statistically significant.

• There is a difference of 11 percentage points in correctly answered questions among adults age 45 and older (58% correct, on average) compared with those under age 45 (47% correct). This difference is statistically significant.

• Financial literacy increases as household income increases; the difference between each successive income group is statistically significant. The gap in correctly answered questions between those with household incomes below $25,000 and those with household incomes of $100,000 or more is 27 percentage points.

• Financial literacy varies with employment status. In particular, those unemployed or disabled11 have significantly less personal nance knowledge than those employed12 and those retired.13

Figure 7
Source: TIAA Institute-GFLEC Personal Finance Index (2020).

Financial literacy is positively correlated with both general education and financial education (Figure 8). These findings are consistent with other studies, including previous waves of the P-Fin Index.14

• Higher levels of general education are strongly associated with greater financial literacy; the difference between each successive education group is statistically significant. Those with a college degree correctly answered two-thirds of the index questions, on average, compared with one-third among those with less than a high school degree.

• There is an 11-percentage point differential in correctly answered questions between individuals who have participated in a financial education class or program and those who have not received financial education.15

Figure 8
Source: TIAA Institute-GFLEC Personal Finance Index (2020).

10See Lusardi, Mitchell and Curto (2010), Lusardi and Mitchell (2008, 2011a, 2011b, 2017), Lusardi and Tufano (2009, 2015), Lusardi, Oggero and Yakoboski (2017), and Yakoboski, Lusardi and Hasler (2018, 2019).

11Includes those unemployed or on temporary lay-off, as well as those disabled and unable to work.

12Includes those employed full time, part time and self-employed.

13These findings are consistent with what is reported in many other studies. See also the review by Lusardi and Mitchell (2014).

14See Lusardi and Mitchell (2007, 2011b, 2014), Lusardi, Oggero and Yakoboski (2017), and Yakoboski, Lusardi and Hasler (2018, 2019).

15See Lusardi and Mitchell (2014) for a discussion of existing research regarding the relationship between financial education programs and financial literacy levels, as well as the challenges inherent in empirically establishing causality and effectiveness of financial education.

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