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Keeping It Simple: Financial Literacy and Rules of Thumb

Alejandro Drexler (), Greg Fischer and Antoinette Schoar ()

American Economic Journal: Applied Economics, 2014, vol. 6, issue 2, 1-31

Abstract: Micro-entrepreneurs often lack the financial literacy required to make important financial decisions. We conducted a randomized evaluation with a bank in the Dominican Republic to compare the impact of two distinct programs: standard accounting training versus a simplified, rule-of-thumb training that taught basic financial heuristics. The rule-of-thumb training significantly improved firms' financial practices, objective reporting quality, and revenues. For micro-entrepreneurs with lower skills or poor initial financial practices, the impact of the rule-of-thumb training was significantly larger than that of the standard accounting training, suggesting that simplifying training programs might improve their effectiveness for less sophisticated individuals.

JEL-codes: D04 G21 L24 L25 L26 M41 O16 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/app.6.2.1
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Working Paper: Keeping it simple: financial literacy and rules of thumb (2014) Downloads
Working Paper: Keeping it Simple: Financial Literacy and Rules of Thumb (2010) Downloads
Working Paper: Keeping it simple: financial literacy and rules of thumb (2010) Downloads
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