Financial Education Affects Financial Decision-Making: Evidence from the COVID-19 Pandemic Response

Donghoon Lee, Daniel Mangrum, Wilbert van der Klaauw and Crystal Wang

No 1131, Staff Reports from Federal Reserve Bank of New York

Abstract: Using cohort-by-state exposure to high school financial education mandates linked to credit bureau data, we study whether financial education raises the propensity to act when macroeconomic conditions and policy create favorable opportunities. We take advantage of the COVID-19 pandemic setting since many financial decisions households routinely face were particularly salient and because the decision windows are cleanly identified. We focus on several consequential financial decisions facing households: reducing revolving credit card balances, purchasing a home, and refinancing a mortgage. We find that those with more financial education reduced revolving credit card balances following stimulus checks by about six percent more than non-mandated peers; were roughly four percent more likely to complete rate-only mortgage refinances when rates were at historic lows; and were about ten percent more likely to buy a first-time home with a mortgage. Mediation analysis shows that most results are driven by a higher propensity to act rather than by pre-existing credit standing. Since the financial decisions studied are commonplace, the findings likely generalize beyond the pandemic, implying that financial education can increase policy pass-through to household balance sheets.

Keywords: financial education; high school curriculum; financial decision-making; household debt; COVID-19 pandemic (search for similar items in EconPapers)
JEL-codes: D14 G51 G53 (search for similar items in EconPapers)
Pages: 55
Date: 2024-10-01
New Economics Papers: this item is included in nep-ban, nep-fle, nep-pay and nep-ure
Note: Revised September 2026. Previous title: “Financial Education and Household Financial Decisions During the Pandemic.”
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1131.pdf Full text (application/pdf)
https://www.newyorkfed.org/research/staff_reports/sr1131.html Summary (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:99058

Ordering information: This working paper can be ordered from

DOI: 10.59576/sr.1131

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().