Financial Literacy, Financial Education and Economic Outcomes

Abstract

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.

Evaluating a Financial Education Curriculum as an Intervention to Improve Financial Behaviors and Financial Well‐Being of Survivors of Domestic Violence: Results from a Longitudinal Randomized Controlled Study

“…Unlike other robust evaluations of financial literacy programs that focus on more financially stable adult populations (Collins and O'Rourke ; Hastings, Madrian, and Skimmyhorn ; Lusardi and Mitchell ), this study indicates that teaching financial education with domestic violence survivors is not only theoretically important but also empirically effective. Though the women in this study come from lower socioeconomic statuses and, as survivors leaving abusive relationships, would be less financially stable or have limited access to resources, the findings from this study suggest that successful financial education and intervention are possible and should even be considered required for this population.…”

Experimental Evidence on the Effects of Financial Education on Elementary School Students' Knowledge, Behavior, and Attitudes

“…Unfortunately, even studies that document positive impacts of economic or financial education may offer limited insights. Correlations between financial knowledge levels and financial behaviors do not necessarily imply a causal relationship (see Hastings, Madrian, and Skimmyhorn for a discussion). Moreover, recent work by Fernandes, Lynch, and Netemeyer () suggests that the practical significance of the effects of financial education interventions tend to be alarmingly small even when they are statistically significant.…”

The Economic Importance of Financial Literacy: Theory and Evidence

“… 43 See for instance Collins and O’Rourke (2010); Gale, Harris and Levine (2012); Hastings, Madrian, and Skimmyhorn (2012); Hathaway and Khatiwada (2008); Lusardi and Mitchell (2007b); Lyons, Palmer, Jayaratne, and Scherpf (2006); and Martin (2007). Hira (2010) provides a broad overview of research on financial education over a long time span.…”