What Does Financial Literacy Training Teach Us?

Bruce Ian Carlin and David Robinson

No 16271, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: A21 G18 H52 (search for similar items in EconPapers)
Date: 2010-08
Note: CF ED PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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.

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