We review journal publications from 2007 to 2023 that specifically study or consider racial/ethnic and gender differences in financial knowledge. Of the 32 papers we review, 12 focus on racial/ethnic differences, 7 focus on gender differences, and 13 consider racial/ethnic and gender differences. From these studies, we estimate that, on average White adults score 17 percentage points higher than Black adults on objective financial knowledge, 14 percentage points higher than Hispanic adults, and 2 percentage points lower than Asian adults. We also estimate that, on average, men score 13 percentage points higher than women on objective financial knowledge. We also provide average racial/ethnic and gender differences in subjective financial, knowledge, and these differences across groups seem much smaller. We provide an overview of possible determinants for these racial/ethnic and gender gaps in financial knowledge. We discuss how stakeholders should leverage research on financial knowledge and directions for future research with the purpose to address racial/ethnic and gender gaps in financial knowledge in the United States.

We examine financial literacy in Germany and its relevance for financial wellbeing. Using data from the Panel on Household Finances collected in 2021, we show that about 62% of German households answer the Big Three financial literacy questions correctly. Those with lower education, who are out of the labor force, women, and those living in East Germany have lower levels of financial literacy. Identifying groups with lower financial literacy and developing strategies to reach them and enhance their abilities should therefore be an integral part of the German national financial literacy strategy. Financial literacy is linked to financial wellbeing: we document that those with higher financial literacy have a higher stock market participation rate and are less likely to report financial difficulties.

We analyze a national sample of Americans with respect to their debt literacy, financial experiences, and their judgments about the extent of their indebtedness. Debt literacy is a component of broader financial understanding that measures knowledge about debt and self-assessed financial knowledge. Financial experiences are the participants’ reported experiences with traditional borrowing, alternative borrowing, and investing. Overindebtedness is a self-reported measure. Debt literacy is low, with only about one-third of the population grasping the basics of interest compounding. Even after controlling for demographics, we find a relationship between debt literacy and both financial experiences and debt loads. Individuals with lower levels of debt literacy tend to transact in high-cost manners, incurring higher fees and using high-cost borrowing. We provide a rough estimate of the national implications of debt ignorance on credit card costs by consumers. Less knowledgeable individuals also report that their debt loads are excessive or that they are unable to judge their debt position.

Using a special-purpose module implemented in the Health and Retirement Study, we evaluate financial sophistication in the American population over the age of 50. We combine several financial literacy questions into an overall index to highlight which questions best capture financial sophistication and examine the sensitivity of financial literacy responses to framing effects. Results show that many older respondents are not financially sophisticated: they fail to grasp essential aspects of risk diversification, asset valuation, portfolio choice, and investment fees. Subgroups with notable deficits include women, the least educated, non-Whites, and those age 75+. In view of the fact that retirees increasingly must take on responsibility for their own retirement security, such meager levels of knowledge have potentially serious and negative implications.