The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers

20 Pages Posted: 26 Oct 2009

See all articles by Patrick J. Bayer

Patrick J. Bayer

Duke University - Department of Economics; National Bureau of Economic Research (NBER)

B. Douglas Bernheim

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

John Karl Scholz

University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER)

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Abstract

We examine the effects of education on financial decision-making skills by identifying an interesting source of variation in pertinent training. During the 1990s, an increasing number of individuals were exposed to programs of financial education provided by their employers. If, as some have argued, low saving frequently results from a failure to appreciate economic vulnerabilities, then education of this form could prove to have a powerful effect on behavior. The current article undertakes an analysis of these programs using a previously unexploited survey of employers. We find that both participation in and contributions to voluntary savings plans are significantly higher when employers offer retirement seminars. The effect is typically much stronger for nonhighly compensated employees than for highly compensated employees. The frequency of seminars emerges as a particularly important correlate of behavior. We are unable to detect any effects of written materials, such as newsletters and summary plan descriptions, regardless of frequency. We also present evidence on other determinants of plan activity.

Suggested Citation

Bayer, Patrick J. and Bernheim, B. Douglas and Scholz, John Karl, The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers. Economic Inquiry, Vol. 47, Issue 4, pp. 605-624, October 2009. Available at SSRN: https://ssrn.com/abstract=1493451 or http://dx.doi.org/10.1111/j.1465-7295.2008.00156.x

Patrick J. Bayer (Contact Author)

Duke University - Department of Economics ( email )

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B. Douglas Bernheim

Stanford University - Department of Economics ( email )

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John Karl Scholz

University of Wisconsin - Madison - Department of Economics ( email )

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608-262-2033 (Fax)

National Bureau of Economic Research (NBER) ( email )

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