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The minimal impact of a large-scale financial education program in Mexico City

Author

Listed:
  • Bruhn, Miriam
  • Lara Ibarra, Gabriel
  • McKenzie, David

Abstract

We conduct randomized experiments around a large-scale financial literacy course in Mexico City to understand the reasons for low take-up among a general population, and to measure the impact of this financial education course. Our results suggest that reputational, logistical, and specific forms of behavioral constraints are not the main reasons for limited participation, and that people do respond to higher benefits from attending in the form of monetary incentives. Attending training results in a 9 percentage point increase in financial knowledge, and a 9 percentage point increase in some self-reported measures of saving, but in no impact on borrowing behavior. Administrative data suggests that any savings impact may be short-lived. Our findings indicate that this course which has served over 300,000 people and has expanded throughout Latin America has minimal impact on marginal participants, and that people are likely making optimal choices not to attend this financial education course.

Suggested Citation

  • Bruhn, Miriam & Lara Ibarra, Gabriel & McKenzie, David, 2014. "The minimal impact of a large-scale financial education program in Mexico City," Journal of Development Economics, Elsevier, vol. 108(C), pages 184-189.
  • Handle: RePEc:eee:deveco:v:108:y:2014:i:c:p:184-189
    DOI: 10.1016/j.jdeveco.2014.02.009
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    References listed on IDEAS

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    1. Dean Karlan & Martin Valdivia, 2011. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 510-527, May.
    2. Seshan, Ganesh & Yang, Dean, 2014. "Motivating migrants: A field experiment on financial decision-making in transnational households," Journal of Development Economics, Elsevier, vol. 108(C), pages 119-127.
    3. Doi, Yoko & McKenzie, David & Zia, Bilal, 2012. "Who you train matters : identifying complementary effects of financial education on migrant households," Policy Research Working Paper Series 6157, The World Bank.
    4. John Gibson & David McKenzie & Bilal Zia, 2014. "The Impact of Financial Literacy Training for Migrants," World Bank Economic Review, World Bank Group, vol. 28(1), pages 130-161.
    5. Lauren E. Willis, 2011. "The Financial Education Fallacy," American Economic Review, American Economic Association, vol. 101(3), pages 429-434, May.
    6. Shawn Cole & Thomas Sampson & Bilal Zia, 2011. "Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets?," Journal of Finance, American Finance Association, vol. 66(6), pages 1933-1967, December.
    7. Jeffrey R Kling & Jeffrey B Liebman & Lawrence F Katz, 2007. "Experimental Analysis of Neighborhood Effects," Econometrica, Econometric Society, vol. 75(1), pages 83-119, January.
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    Cited by:

    1. repec:oup:wbecrv:v:31:y:2017:i:3:p:611-630. is not listed on IDEAS
    2. Teresa Molina Millán & Karen Macours, 2017. "Attrition in randomized control trials: Using tracking information to correct bias," FEUNL Working Paper Series novaf:wp1702, Universidade Nova de Lisboa, Faculdade de Economia.
    3. Teresa Molina Millan & Karen Macours, 2017. "Attrition in randomized control trials: Using tracking information to correct bias," NOVAFRICA Working Paper Series wp1702, Universidade Nova de Lisboa, Faculdade de Economia, NOVAFRICA.
    4. Grohmann, Antonia & Kouwenberg, Roy & Menkhoff, Lukas, 2015. "Childhood roots of financial literacy," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 114-133.
    5. Tim Kaiser & Lukas Menkhoff, 2018. "Active Learning Fosters Financial Behavior: Experimental Evidence," Discussion Papers of DIW Berlin 1743, DIW Berlin, German Institute for Economic Research.
    6. Tim Kaiser & Lukas Menkhoff, 2017. "Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?," World Bank Economic Review, World Bank Group, vol. 31(3), pages 611-630.

    More about this item

    Keywords

    Financial literacy; Financial capability; Encouragement design; Low take-up;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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