Financial Education

This chapter delves into the critical role of financial literacy in shaping household finance, with a particular focus on stock market participation, portfolio choices, credit behavior, retirement planning, and economic resilience. It highlights significant gender disparities in financial literacy and the complementarity between financial literacy and financial advice. The chapter also critically evaluates various measurement practices, including knowledge-based, behavioral, and multidimensional approaches, and uses microdata from the Italian Survey on Household Income and Wealth to demonstrate the persistent gaps in financial knowledge. Probit regression analyses confirm a robust and statistically significant relationship between financial literacy and market participation, even after controlling for socioeconomic and demographic characteristics. The chapter underscores financial literacy as a critical form of human capital with significant implications for individual financial well-being and policy design. Through a difference-in-differences design, the chapter explores the causality of financial literacy, providing partial causal support with heterogeneous effects across financial products. The findings highlight the importance of financial literacy in promoting economic resilience and informed financial decision-making.