Raising Household Saving: Does Financial Education Work?

Abstract

This article highlights the prevalence and economic outcomes of financial illiteracy among American households, and reviews previous research that examines how improving financial literacy affects household saving. Analysis of the research literature suggests that previous financial literacy efforts have yielded mixed results. Evidence suggests that interventions provided for employees in the workplace have helped increase household saving, but estimates of the magnitude of the impact vary widely. For financial education initiatives targeted to other groups, the evidence is much more ambiguous, suggesting a need for more econometrically rigorous evaluations.

Keywords: Economic Education, Habit Formation, Life Cycle, Precautionary Saving, Saving

JEL Classification: A20, A21, E21