Selection into Financial Literacy Programs: Evidence from a Field Study

25 Pages Posted: 16 Dec 2007

See all articles by Stephan Meier

Stephan Meier

Federal Reserve Bank of Boston; IZA Institute of Labor Economics; Columbia Business School - Management

Charles Sprenger

University of California, San Diego (UCSD)

Date Written: November 26, 2007

Abstract

As financial literacy has been shown to correlate with good financial decisions, policymakers promote educational programs to improve individuals' financial decisions. But who selects into educational programs and who acquires information about personal finance? This paper, in a field study with more than 870 individuals, offers individuals free information about their credit reports (and credit scores). About 55 percent choose to participate in this small counseling program. To test whether those who self-select to acquire information about personal finance differ from those who do not on (normally) unobservable characteristics, we elicit time preferences, using incentivized choice experiments. Our results show that the two groups differ sharply in their discount factors: those who choose to acquire information do not discount the future as much as those who choose not to acquire information. This result has implications for financial education programs.

Keywords: selection, credit scores, financial literacy, time preferences, field experiment

JEL Classification: D14, D91, C93

Suggested Citation

Meier, Stephan and Sprenger, Charles, Selection into Financial Literacy Programs: Evidence from a Field Study (November 26, 2007). FRB of Boston Public Policy Discussion Paper No. 07-5. Available at SSRN: https://ssrn.com/abstract=1073158 or http://dx.doi.org/10.2139/ssrn.1073158

Stephan Meier (Contact Author)

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Columbia Business School - Management ( email )

3022 Broadway
New York, NY 10027
United States

Charles Sprenger

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

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