Does Financial Literacy Impact Investment Participation and Retirement Planning in Japan?

TL;DR

This study uses causal discovery to analyze whether financial literacy directly influences investment participation and retirement planning in Japan, revealing that increasing literacy alone may not be sufficient to motivate financial activities.

Contribution

It applies the Fast Causal Inference (FCI) model to Japanese survey data, providing new insights into the causal effects of financial literacy on financial behaviors.

Findings

Financial literacy does not directly increase investment participation.

Financial literacy does not directly enhance retirement planning.

Alternative strategies are needed to motivate financial activities.

Abstract

By employing causal discovery method, the Fast Causal Inference (FCI) model to analyze data from the 2022 "Financial Literacy Survey," we explore the causal relationships between financial literacy and financial activities, specifically investment participation and retirement planning. Our findings indicate that increasing financial literacy may not directly boost engagement in financial investments or retirement planning in Japan, which underscores the necessity for alternative strategies to motivate financial activities among Japanese households. This research offers valuable insights for policymakers focused on improving financial well-being by advancing the use of causal discovery algorithms in understanding financial behaviors.