The Financial Education Fallacy

7 Pages Posted: 24 Jun 2011 Last revised: 2 Jul 2011

Lauren E. Willis

Loyola Law School Los Angeles

Date Written: June 21, 2011

Abstract

In the wake of the Great Recession, financial education has received renewed political support. Research to date does not demonstrate a causal chain from financial education to higher financial literacy to better financial behavior to improved financial outcomes, yet the search for effective financial education continues. But it is time to ask whether this enterprise is misguided. If we could create a society where ordinary consumers are sufficiently educated that they could navigate one by one through an ever-changing cornucopia of financial products, would we want to live in it? Two reasons we would not are discussed here. First, the time, expense, and invasion of privacy that would be required would be enormous. Second, living in such a world would entail, paradoxically, a decrease in individual autonomy. Although I have argued elsewhere that we will never find the effective financial education for which many search, the more fundamental fallacy may be the assumption that this is the path we should take at all.

Suggested Citation

Willis, Lauren E., The Financial Education Fallacy (June 21, 2011). American Economic Review, Vol. 101, No. 3, pp. 429-434, 2011; Loyola-LA Legal Studies Paper No. 2011-21. Available at SSRN: https://ssrn.com/abstract=1869323

Lauren E. Willis (Contact Author)

Loyola Law School Los Angeles ( email )

919 Albany Street
Los Angeles, CA 90015-1211
United States
213-736-1086 (Phone)
213-380-3769 (Fax)

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