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Financial Literacy, Financial Education and Economic Outcomes

  • Justine S. Hastings
  • Brigitte C. Madrian
  • William L. Skimmyhorn

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 offer products that facilitate informed choice. We review the literature on alternative policies to improve financial outcomes, and compare the evidence to evidence on the efficacy and cost of financial education. Finally, we discuss directions for future research.

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File URL: http://www.nber.org/papers/w18412.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18412.

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Date of creation: Sep 2012
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Publication status: published as Justine S. Hastings & Brigitte C. Madrian & William L. Skimmyhorn, 2013. "Financial Literacy, Financial Education, and Economic Outcomes," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 347-373, 05.
Handle: RePEc:nbr:nberwo:18412
Note: AG ED LS PE
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  1. Laurent-Emmanuel Calvet & John Y. Campbell & Paolo Sodini, 2009. "Measuring the Financial Sophistication of Households," Post-Print hal-00459687, HAL.
  2. Dimitris Christelis & Tullio Jappelli & Mario Padula, 2008. "Cognitive Abilities and Portfolio Choice," Working Papers 2008_19, Department of Economics, University of Venice "Ca' Foscari".
  3. Gene Amromin & Jennifer Huang & Clemens Sialm, 2007. "The tradeoff between mortgage prepayments and tax-deferred retirement savings," NBER Chapters, in: Trans-Atlantic Public Economics Seminar (TAPES), Public Policy and Retirement, pages 2014-2040 National Bureau of Economic Research, Inc.
  4. Lex Borghans & Angela Lee Duckworth & James J. Heckman & Bas ter Weel, 2008. "The Economics and Psychology of Personality Traits," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
  5. Drexler, Alejandro & Fischer, Greg & Schoar, Antoinette S, 2010. "Keeping it Simple: Financial Literacy and Rules of Thumb," CEPR Discussion Papers 7994, C.E.P.R. Discussion Papers.
  6. John Ameriks & Andrew Caplin & John Leahy, 2003. "Wealth Accumulation and the Propensity to Plan," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 1007-1047.
  7. Che, Yeon-Koo & Dessein, Wouter & Kartik, Navin, 2010. "Pandering to Persuade," CEPR Discussion Papers 7970, C.E.P.R. Discussion Papers.
  8. Giglio, Stefano & Pathak, Parag & Campbell, John Y., 2011. "Forced Sales and House Prices," Scholarly Articles 9887623, Harvard University Department of Economics.
  9. Fabian Duarte & Justine S. Hastings, 2012. "Fettered Consumers and Sophisticated Firms: Evidence from Mexico's Privatized Social Security Market," NBER Working Papers 18582, National Bureau of Economic Research, Inc.
  10. Santosh Anagol & Shawn Cole & Shayak Sarkar, 2012. "Understanding the Advice of Commissions-Motivated Agents: Evidence from the Indian Life Insurance Market," Harvard Business School Working Papers 12-055, Harvard Business School, revised Oct 2015.
  11. Glenn Ellison, 2005. "A Model of Add-On Pricing," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 585-637.
  12. Carpena, Fenella & Cole, Shawn & Shapiro, Jeremy & Zia, Bilal, 2011. "Unpacking the causal chain of financial literacy," Policy Research Working Paper Series 5798, The World Bank.
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