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Research Article

What You Don’t Know Can’t Satisfy You: Financial Literacy and Pension Satisfaction

Olaf Stotz*

Corresponding Author: Olaf Stotz, Finance Department, Frankfurt School of Finance & Management, Frankfurt, Germany.

Received: December 07, 2023 ;    Revised: January 20, 2024 ;    Accepted: January 23, 2024 ;   Available Online: February 01, 2024

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We analyze the relation between financial literacy and financial well-being in the pension domain. Using survey answers, we find that individuals with a high level of financial literacy display a pension satisfaction level that is more than 0.3 higher (on a scale ranging from 1 to 5) than that of individuals with a low level. We give this difference a causal interpretation by using an instrumental variables approach, a matched estimation approach and various robustness checks. We conclude that financial literacy is an important channel to improve individuals’ satisfaction in the retirement domain.

Keywords: Financial literacy, Financial well-being, Pension satisfaction

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