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Financial Literacy, Financial Education, and Economic Outcomes

  • Justine S. Hastings


    (Department of Economics, Brown University, Providence, Rhode Island 02912
    National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Brigitte C. Madrian

    (National Bureau of Economic Research, Cambridge, Massachusetts 02138
    Harvard Kennedy School of Government, Cambridge, Massachusetts 02138)

  • William L. Skimmyhorn

    (Department of Social Sciences, United States Military Academy, West Point, New York 10996)

In this article, we review the literature on financial literacy, financial education, and consumer financial outcomes. We consider how financial literacy is measured in the current literature and examine how well the existing literature addresses whether financial education improves financial literacy or personal financial outcomes. We discuss the extent to which a competitive market provides incentives for firms to educate consumers or to offer products that facilitate informed choice. We review the literature on alternative policies to improve financial outcomes and compare the evidence with that on the efficacy and cost of financial education. Finally, we discuss directions for future research.

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Article provided by Annual Reviews in its journal Annual Review of Economics.

Volume (Year): 5 (2013)
Issue (Month): 1 (05)
Pages: 347-373

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Handle: RePEc:anr:reveco:v:5:y:2013:p:347-373
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