Review of Economics of the Household

, Volume 16, Issue 3, pp 859–878 | Cite as

Financial literacy and anxiety about life in old age: evidence from the USA

  • Yoshihiko KadoyaEmail author
  • Mostafa Saidur Rahim Khan
  • Tomomi Hamada
  • Alvaro Dominguez


This study examines whether financial literacy can help to reduce anxiety about life in old age. We hypothesized that financially literate people are more able to earn income and accumulate assets, leading them to have a less anxious life in old age. On the other hand, less financially literate people rely more on social security to secure themselves in the old age as they are not able to accumulate sufficient assets. By using US survey data, we provide evidence that assets significantly reduce anxiety about life in old age only for people who are more financially literate. For less financially literate people, social security plays an important role in reducing anxiety about life in old age. Besides these, having a child and doing regular exercise also reduced anxiety for all respondents but marital status reduced anxiety in respondents over 40 years of age. The results of our study are robust to measurement of financial literacy and endogeneity problems.


Aging policy Anxiety Financial literacy United States 

JEL Classification

G10 I18 I31 



This research used micro data from the Preference Parameters Study of Osaka University’s 21st Century COE Program “Behavioral Macrodynamics Based on Surveys and Experiments” and its Global COE project “Human Behavior and Socioeconomic Dynamics.” We acknowledge the program/project’s contributors: Yoshiro Tsutsui, Fumio Ohtake, and Shinsuke Ikeda. The authors appreciate for the valuable comments of anonymouse referees.


This work was supported by JSPS KAKENHI Grant Numbers JP15KK0083 and JP15K17075; RISTEX JST; and a grant-in-aid from Zengin Foundation for Studies on Economics and Finance.

Compliance with ethical standards

Conflict of interest

The authors declare that they have no conflict of interest.


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© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of EconomicsHiroshima UniversityHigashi-HiroshimaJapan
  2. 2.Graduate School of EconomicsNagoya UniversityNagoya-shiJapan
  3. 3.Department of Management SynthesisChubu UniversityKasugaiJapan

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