“Financial Literacy in South Africa"
 

About the Seminar

Financial literacy, the ability to understand financial concepts and make basic financial calculations, has shown to explain stock market participation (van Rooij, Lusardi and Alessie, 2011), differences in portfolio returns (Bianchi, 2018), and wealth inequality (Lusardi, Michaud and Mitchell, 2017). Given South Africa’s extremely high levels of income and wealth inequality, financial literacy may become a central policy concern. 

The most popular approach to measure financial literacy is to ask between three and five multiple choice questions which test numeracy, understanding of compound interest, understanding of inflation, and understanding of risk diversification (Lusardi and Mitchell, 2014). These questions have been included in many household surveys worldwide (Lusardi and Mitchell, 2011).

The questions were included in Wave 5 of the National Income Dynamic Study (NIDS). Using NIDS Wave 5 data, I will present preliminary results detailing which groups of South Africans are financially literate, and show relationships between financial literacy and economic outcomes such as preparation for retirement, changes in wealth, and management of debt.

References for abstract:
 
Bianchi, M., 2018. Financial literacy and portfolio dynamics. The Journal of Finance, 73(2), pp.831-859.
Lusardi, A., Michaud, P.C. and Mitchell, O.S., 2017. Optimal financial knowledge and wealth inequality. Journal of Political Economy, 125(2), pp.431-477.
Lusardi, A. and Mitchell, O.S., 2011. Financial literacy around the world: an overview. Journal of Pension Economics & Finance, 10(4), pp.497-508.
Lusardi, A. and Mitchell, O.S., 2014. The economic importance of financial literacy: Theory and evidence. Journal of economic literature, 52(1), pp.5-44.
van Rooij, M., Lusardi, A. and Alessie, R., 2011. Financial literacy and stock market participation. Journal of Financial Economics, 101(2), pp.449-472.
 

About the Presenter

Matthew Olckers completed his undergraduate studies in economics at UCT. He is now busy with his PhD at the Paris School of Economics under the supervision of Francis Bloch and Margherita Comola.

Matthew's research interests include economic development, social networks, and household finance. 


Authors
Elizabeth Nanziri 
Matthew Olckers 



Date: Wednesday, 22 August 2018
Lunch: 12h30 - 13h00, Staff Lounge, 4th Floor, School of Economics, Middle Campus
Seminar: 13h00 - 14h00, Seminar Room, 4th Floor, School of Economics, Middle Campus