Financial awareness and retirement savings

This paper demonstrates the potential of utilizing search-based data based on the internet search behavior of millions of households to develop household finance measures. It introduces a novel search-based financial awareness index derived from the Search Volume Index (SVI) from Google Trends. The index measures individuals’ awareness of topics related to individual retirement accounts (IRAs) and their efforts to acquire relevant financial knowledge. The analysis reveals significant time-series and cross-sectional heterogeneity in financial awareness regarding IRA savings. The results confirm that increased financial awareness is associated with greater IRA savings. Robustness tests validate the financial awareness index. The findings highlight the role of financial awareness as a crucial, yet often overlooked, dimension of financial literacy. Furthermore, the study underscores the value of search-based data as a complement to traditional survey-based measures, offering a solution to data limitations in household finance research. The methodology employed here to derive search-based financial measures can be readily extended to other areas of household finance.