What Does Financial Literacy Training Teach Us?
This paper uses a quasi natural experiment to explore how financial education changes savings, investment, and consumer behavior. We use data from a Junior Achievement Finance Park to measure the effect of a financial literacy program on students who are assigned fictitious life situations and asked to create household budgets for these roles. The treatment effects of the financial literacy program are strong. Students who experienced training were somewhat better at making current-cost/current-benefit tradeoff decisions (spending more today versus spending less today). But the tendency to try to save more today often led them to make poor choices when they faced tradeoffs between current-costs and future-benefits today (i.e., when spending more today is cheaper in present value terms). Most importantly, students who had attended training showed greater up-take of decision support that was offered in the park. This indicates that decision support and financial literacy training are complements, not substitutes.
|Date of creation:||Aug 2010|
|Date of revision:|
|Publication status:||published as Bruce Ian Carlin & David T. Robinson, 2012. "What Does Financial Literacy Training Teach Us?," Journal of Economic Education, Taylor and Francis Journals, vol. 43(3), pages 235-247, July.|
|Note:||CF ED PE|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2001.
"Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance,"
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8655, National Bureau of Economic Research, Inc.
- James J. Choi & David Laibson & Brigitte C. Madrian & Andrew Metrick, 2002. "Defined Contribution Pensions: Plan Rules, Participant Decisions, and the Path of Least Resistance," JCPR Working Papers 257, Northwestern University/University of Chicago Joint Center for Poverty Research.
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