Five Steps to Planning Success. Experimental Evidence from U.S. Households

44 Pages Posted: 11 Jun 2014 Last revised: 16 Mar 2023

See all articles by Aileen Heinberg

Aileen Heinberg

RAND Corporation

Angela Hung

RAND Corporation - Labor and Population

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California; IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Annamaria Lusardi

Stanford University - Stanford Institute for Economic Policy Research

Anya Samek

University of California, San Diego (UCSD) - Rady School of Management; Center for Economic and Social Research (CESR)

Joanne Yoong

National University of Singapore (NUS)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2014

Abstract

While financial knowledge has been linked to improved financial behavior, there is little consensus on the value of financial education, in part because rigorous evaluation of various programs has yielded mixed results. However, given the heterogeneity of financial education programs in the literature, focusing on "generic" financial education can be inappropriate and even misleading. Lusardi (2009) and others argue that pedagogy and delivery matter significantly. In this paper, we design and field a low-cost, easily-replicable financial education program called "Five Steps," covering five basic financial planning concepts that relate to retirement. We conduct a field experiment to evaluate the overall impact of "Five Steps" on a probability sample of the American population. In different treatment arms, we quantify the relative impact of delivering the program through video and narrative formats. Our results show that short videos and narratives (each takes about three minutes) have sizable short-run effects on objective measures of respondent knowledge. Moreover, keeping informational content relatively constant, format has significant effects on other psychological levers of behavioral change: effects on motivation and self-efficacy are significantly higher when videos are used, which ultimately influences knowledge acquisition. Follow-up tests of respondents' knowledge approximately eight months after the interventions suggest that between one-quarter and one-third of the knowledge gains and about one-fifth of the self-efficacy gains persist. Thus, this simple program has effects both in the short run and medium run.

Suggested Citation

Heinberg, Aileen and Hung, Angela and Kapteyn, Arie and Lusardi, Annamaria and Samek, Anya and Yoong, Joanne, Five Steps to Planning Success. Experimental Evidence from U.S. Households (June 2014). NBER Working Paper No. w20203, Available at SSRN: https://ssrn.com/abstract=2448908

Aileen Heinberg (Contact Author)

RAND Corporation ( email )

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Angela Hung

RAND Corporation - Labor and Population ( email )

United States

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California ( email )

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IZA Institute of Labor Economics

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National Bureau of Economic Research (NBER) ( email )

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Annamaria Lusardi

Stanford University - Stanford Institute for Economic Policy Research ( email )

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Stanford, CA CA 94305
United States

HOME PAGE: http://siepr.stanford.edu/people/annamaria-lusardi

Anya Samek

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive #0553
Rady School of Management
La Jolla, CA 92093-0553
United States

HOME PAGE: http://anyasamek.com

Center for Economic and Social Research (CESR) ( email )

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Los Angeles, CA 90089-3332
United States

Joanne Yoong

National University of Singapore (NUS) ( email )

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

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