Teaching children to save: What is the best strategy for lifetime savings?

Bucciol, Alessandro; Veronesi, Marcella

doi:10.1016/j.joep.2014.07.003

Cited by 112 publications

(96 citation statements)

References 45 publications

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“…Further, we test whether the childhood scales have a direct effect on this financial behavior, beyond their indirect effect through financial literacy. Here we extend the work of Webley andNyhus (2006, 2013) and Bucciol and Veronesi (2014) who document a positive direct effect of parental teaching on savings, but without considering the role of financial literacy as a potential mediator.…”

Section: Introductionsupporting

confidence: 52%

“…Bucciol and Veronesi (2014) stand out here and find that any form of parental teaching received in childhood (self-reported and recollected) has a positive effect on the savings behavior of adults (from 18 to 80 years old). They conclude that when it comes to different parental teaching strategies: "the more the better".…”

Section: Financial Socialization By Parentsmentioning

confidence: 74%

“…Despite having a large number of control variables, we recognize that potential unobserved factors could influence the interaction between childhood scales, financial literacy and financial behavior. We therefore perform generalized sensitivity analysis (GSA) as developed by Harada (2013) and applied by Bucciol and Veronesi (2014) in our context.…”

Section: Robustness Testsmentioning

confidence: 99%

“…Indeed, several studies either look at the impact of some childhood experiences on financial behavior (e.g., Webley andNyhus, 2013, Bucciol andVeronesi, 2014), or use a specific childhood variable as instrument for financial literacy (Behrman et al, 2010, 2012, van Rooij et al, 2011b. Thus many childhood variables have been considered in relation to financial literacy and financial behavior.…”

Section: Introductionmentioning

confidence: 99%

“…These factors include socio-demographic variables in the way that better education, higher age or higher incomes are related to higher financial literacy. Many of these factors seem to be at least partially shaped by childhood experiences of today's adults (see Lusardi et al, 2010).Indeed, several studies either look at the impact of some childhood experiences on financial behavior (e.g., Webley and Nyhus, 2013, Bucciol andVeronesi, 2014), or use a specific childhood variable as instrument for financial literacy (Behrman et al, 2010, 2012, van Rooij et al, 2011b. Thus many childhood variables have been considered in relation to financial literacy and financial behavior.…”

mentioning

confidence: 99%

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Childhood roots of financial literacy

Grohmann

Kouwenberg

Menkhoff

2015

Journal of Economic Psychology

175

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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. We use the concept of financial socialization and aim to represent three major agents of financial socialization: family, school and work. Thus we compile twelve relevant childhood characteristics in a new survey study and examine their relation to financial literacy, while controlling for established socio-demographic characteristics. We find in a mediation analysis that both family and school positively affect the financial literacy of adults. Moreover, financial literacy and school related variables also have a direct effect on financial behavior. This suggests that family factors and schooling work through complementary channels. Terms of use: Documents in EconStor may Childhood Roots of Financial Literacy 1 IntroductionMany economic decisions require basic knowledge of financial concepts, such as interest rates and inflation. However, many people lack this type of knowledge. The degree of this deficiency has been systematically researched using tests, which collect "financial literacy"scores. There is growing evidence that individuals who possess higher financial literacy have better economic outcomes as it improves financial decision making (e.g., Lusardi and Mitchell, 2014). At the same time, these studies also find that in many countries and many population groups, financial literacy levels are low. In the USA only 30.2% can answer all three of the standard financial literacy questions. This number is not much higher at 44.8% and 53.2% in the Netherlands and Germany respectively (Lusardi and Mitchell, 2014, BucherKoenen and Lusardi, 2011, van Rooij et al., 2011b Several variables have been found to be linked to a person's financial literacy. These factors include socio-demographic variables in the way that better education, higher age or higher incomes are related to higher financial literacy. Many of these factors seem to be at least partially shaped by childhood experiences of today's adults (see Lusardi et al., 2010).Indeed, several studies either look at the impact of some childhood experiences on financial behavior (e.g., Webley and Nyhus, 2013, Bucciol andVeronesi, 2014), or use a specific childhood variable as instrument for financial literacy (Behrman et al., 2010, 2012, van Rooij et al., 2011b. Thus many childhood variables have been considered in relation to financial literacy and financial behavior. What remains less clear is: what are the main channels through which childhood experiences affects financial literacy and financial be...

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Section: Introductionsupporting

confidence: 52%

Section: Financial Socialization By Parentsmentioning

confidence: 74%

Section: Robustness Testsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

See 3 more Smart Citations

Childhood roots of financial literacy

Grohmann

Kouwenberg

Menkhoff

2015

Journal of Economic Psychology

175

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Economic Socialization: Childhood, Adolescence, and Early Adulthood

Otto

Serido²

2017

Economic Psychology

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Exploring the relationships between impatience, savings automation, and financial welfare

Middlewood¹,

Chin²,

Johnson³

et al. 2018

Fin Plan Rev

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The Behavioral Life‐Cycle hypothesis (Thaler & Shefrin, ) models consumers as having both impatient “doer” preferences, representing their desire to spend now, and patient “planner” preferences, representing long‐run welfare considerations. The Behavioral Life‐Cycle hypothesis suggests that those with doer preferences may benefit from strategies that constrain their present behavior and promote saving for the future, like automating deposits into savings accounts. We analyze over 4,000 responses from the nationally representative National Financial Well‐Being Survey to (a) describe consumer characteristics associated with the decision to automate savings deposits, and (b) explore whether automation is related to improved financial welfare, especially for impatient consumers. We find that savings automation is positively associated with financial socialization (whether the respondent's family discussed financial matters growing up) and financial skill (the ability to act on financial knowledge). We also find that impatient consumers—relative to those with stronger planner preferences—have fewer liquid savings, lower financial well‐being, less confidence in their ability to raise $2,000, and more difficulty paying bills. However, as predicted, these differences between consumers with doer and planner preferences largely disappear for those who automate savings deposits. We discuss implications of this research for financial planners in helping clients improve financial welfare.

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Teaching children to save: What is the best strategy for lifetime savings?

Cited by 112 publications

References 45 publications

Childhood roots of financial literacy

Childhood roots of financial literacy

Economic Socialization: Childhood, Adolescence, and Early Adulthood

Exploring the relationships between impatience, savings automation, and financial welfare

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