Occupational Learning, Financial Knowledge, and the Accumulation of Retirement Wealth

Published: 2010


This study explores the relationship between general human capital investment, financial knowledge, occupational spillovers, and the accumulation of wealth in a primarily descriptive manner. Drawing upon human capital theory and following previous related work by Delavande, Rohwedder and Willis (2008), we hypothesized that individuals with daily exposure to financial knowledge through their occupation would benefit by having greater financial knowledge that would translate into greater wealth accumulation than individuals who do not enjoy such spillovers from their occupation. Using data from the Cognitive Economics Study and the Health and Retirement Study, we find strong evidence that individuals in financial occupations tend to have greater financial knowledge and moderate evidence that they also have greater wealth accumulation.

Key Findings

    • Using data from the Cognitive Economics Study, we find strong patterns of greater financial knowledge, as measured by financial literacy scores, for individuals who sort into occupations with at least some exposure to financial and investment content.
    • We also find some suggestive evidence, which is stronger with the HRS data, that this occupational spillover (of financial concepts to one’s financial knowledge) may translate into greater wealth accumulation.
    • The policy implication is that individuals do seem to benefit from greater financial literacy.