What Does Financial Literacy Training Teach Us?

35 Pages Posted: 24 Aug 2010 Last revised: 26 Sep 2010

See all articles by Bruce I. Carlin

Bruce I. Carlin

University of California, Los Angeles (UCLA) - Anderson School of Management

David T. Robinson

Fuqua School of Business, Duke University; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Date Written: August 2010

Abstract

This paper uses a quasi natural experiment to explore how financial education changes savings, investment, and consumer behavior. We use data from a Junior Achievement Finance Park to measure the effect of a financial literacy program on students who are assigned fictitious life situations and asked to create household budgets for these roles. The treatment effects of the financial literacy program are strong. Students who experienced training were somewhat better at making current-cost/current-benefit tradeoff decisions (spending more today versus spending less today). But the tendency to try to save more today often led them to make poor choices when they faced tradeoffs between current-costs and future-benefits today (i.e., when spending more today is cheaper in present value terms). Most importantly, students who had attended training showed greater up-take of decision support that was offered in the park. This indicates that decision support and financial literacy training are complements, not substitutes.

Suggested Citation

Carlin, Bruce I. and Robinson, David T., What Does Financial Literacy Training Teach Us? (August 2010). NBER Working Paper No. w16271. Available at SSRN: https://ssrn.com/abstract=1662265

Bruce I. Carlin (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

David T. Robinson

Fuqua School of Business, Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0120
United States
919-660-8023 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

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