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.
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.
The authors are grateful to Luke B. Gallagher of the Office of Economic and Manpower Analysis, who managed the data files in these studies. Rachael Cavallaro and Tyler J. Mulcahy helped prepare the tables. Jayne Allen, Bonnie Barlow, Kateryna Sylaska, and Tyler Mulcahy all read and commented on an earlier draft of this work.
This study estimates the effects of Personal Financial Management Course attendance and enrollment assistance using a natural experiment in the US Army. New enlistees' course attendance reduces the probability of having credit account balances, average balances, delinquencies, and adverse legal actions in the first year after the course, but it has no effects on accounts in the second year or credit scores in either year. The course and its enrollment assistance substantially increase retirement savings rates and average monthly contributions, with effects that persist through at least two years. The course has no significant effects on military labor market outcomes.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.