What We’re Reading: Working Paper Revisits Evidence on the Effectiveness of Financial Education

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A recent working paper titled “Financial Education Affects Financial Knowledge and Downstream Behaviors” by Tim Kaiser, Annamaria Lusardi, Lukas Menkhoff, and Carly Urban, conducts a meta-analysis of the economic literature that quantifies the impact of financial education programs on financial knowledge and behaviors. Although the research still is in progress, the preliminary results provide an argument that financial education works: It improves financial knowledge outcomes and financial behaviors.

NEFE’s Takeaways

This work is important because it provides a snapshot of where we are as a field. Moreover, it demonstrates how financial education research is growing and how core findings can change as data and methods evolve. The study summarizes quantitative evidence in a way that allows us to talk about the measurable impact of financial education1 , and it refreshes previous meta-analyses of the financial education literature that were performed years ago when the research in this field was relatively nascent, which is commonly cited as evidence that financial education is not effective (e.g., Fernandes, et al., 2014)). The current research from Kaiser and his co-authors brings new methodological insight and greater inclusion of the rapidly-growing pool of publications in the field. For example, the Kaiser, et al. study focuses on 76 randomized controlled trials (RCTs), a marked increase from the 13 RCTs included in the Fernandes, et al. study. These updates have the potential to change the conversation surrounding financial education effectiveness and practice in encouraging ways.

Ideas for Action

This paper provides a useful summary of evidence and sheds light on the many areas where additional data and research are needed. Much work remains for the research community to better understand what types of interventions and educational programs impact outcomes, to what extent they impact outcomes, and for which segments of our population they are effective and why. An understanding of the mechanisms by which financial education impacts knowledge and behavior can aid the development of new solutions. Similarly, more administrative data on financial behaviors and outcomes will help to estimate the long-run impacts of programs, and cost data will help policymakers—and those who implement policy—to understand the cost-benefit trade-off.

What is an Academic Working Paper?

An academic working paper (e.g., Kaiser, et al.) is a piece of research that authors circulate for scholarship and discussion purposes. Unlike publications, working papers have not yet been vetted by peer review. Working papers may vary in their state of completion: some are works in progress; others are in a stage of the peer-review process but have not yet been accepted; and others have been accepted at a journal with publication forthcoming. Until an article has passed the peer-review process, its analyses and conclusions are subject to change.


1 The authors focus on randomized control trials.

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