Does financial education impact financial literacy and financial behavior, and if so, when?

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Abstract

In a meta-analysis of 126 impact evaluation studies, we find that financial education significantly impacts financial behavior and, to an even larger extent, financial literacy. These results also hold for the subsample of randomized experiments (RCTs). However, intervention impacts are highly heterogeneous: financial education is less effective for low-income clients as well as in low- and lower-middle–income economies. Specific behaviors, such as the handling of debt, are more difficult to influence and mandatory financial education tentatively appears to be less effective. Thus, intervention success depends crucially on increasing education intensity and offering financial education at a “teachable moment.”

Citation

Relevant Evidence Summaries

The evidence was reviewed and included in the following summaries: 

What works to improve people’s financial capability?

Limited but strong evidence supports financial capability interventions. Studies with low-income populations find that financial capability interventions lead to numerous positive outcomes such as increased income and savings, better job placement and retention, higher credit scores, and progress toward financial self-sufficiency.   Certain characteristics of financial capability interventions can enhance their effectiveness. Bundled or integrated…

About this study

AGE: Adults

DIRECTION OF EVIDENCE: Positive impact

FULL TEXT AVAILABILITY: Paid

GENDER: All

HOST COUNTRY: Multiple countries

HOST COUNTRY INCOME: Both

INTERVENTION DURATION: Various

INTERVENTION: Financial education

OUTCOME AREA: Economic Empowerment

OUTCOME AREA: Financial Capabilities

REGION OF ORIGIN OF PARTICIPANT(S): Multiple Regions

STRENGTH OF EVIDENCE: Strong

TYPE OF STUDY: Meta-analysis

YEAR PUBLISHED: 2017

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