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Despite the proliferation of academic studies examining financial literacy and financial outcomes, no consistent definition or empirically validated measures of financial literacy exist. While a handful of questions have become the standard measures of financial literacy in previous research, little work has been done examining whether responses to these questions accurately capture underlying financial capability, or whether they causally relate to subsequent financial well-being. Taking advantage of longitudinal data from the Health and Retirement Study we examine whether some of the questions previously used as measures of financial literacy are consistent measures of financial knowledge and effective predictors of future changes in wealth. We find that respondents frequently do not consistently answer questions across survey waves and that the context in which a question is asked affects the likelihood of correctly responding. Moreover, our regression analyses suggest that correctly answering these questions, consistently or not, has little significant relationship to changes in wealth over time, and is often related to a decrease in future wealth. Our findings should give pause to researchers using the financial literacy questions examined here, particularly from cross-sectional data.Household financial well-being is increasingly determined by the ability of the family members to make complex financial decisions. Following the broad move from defined benefit to defined contribution plans, financial well-being in retirement is now increasingly dependent on effective management of savings and portfolio allocation decisions across both career (accumulation) and retirement (draw down) phases of life. More broadly, the recent financial crisis highlighted the perils

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 1 Repo rates can be of various terms and are backed by various types of collateral. The over-night Treasury GC repo rate represents the rate on the shortest term for the safest and most liquid type of collateral. As such, this rate is a benchmark for other repo rates. Terms of use: Documents in EconStor may 2Treasury securities as part of its Large Scale Asset Purchase (LSAP) program. While the SFP, OMOs, and programs such as TARP were not aimed directly at dislocations in short-term money markets, they did impact the supply of Treasury securities available to be financed by money markets.In general, greater amounts of available Treasury collateral should lead to higher Treasury repo rates, however while all Treasury collateral can be used as high quality repo collateral, it does not necessarily follow that it will be. Our findings strongly support the idea that the propensity for any given Treasury obligation to support repo market activity differs systematically by source.All Treasury securities are of equal quality as collateral, and yet each program we study had different transmission channels, different initiation periods, and different patterns of changes in supply, so that each program's relative impact on the over-night Treasury GC repo market can be identified. Thus this paper contributes to the collective understanding of short-term money markets and hereby seeks to inform policy responses to future crises.In addition to studying the effects of Treasury collateral supply on collateralized funding rates, this study is related to other work on short-term money markets as well as to other studies examining the impact of various programs which were introduced over the course of 2007-2009 to address the multiple dislocations in financial markets. 2 One unique aspect of our study is that we examine both monetary and fiscal policy responses 2 For a sample of such studies, see Gagnon et. al.