State Mandated Financial Education and the Credit Behavior of Young Adults
Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C., Finance and Economics Discussion Series No. 2014-68
42 Pages Posted: 15 Sep 2014
Date Written: August 29, 2014
In the U.S., a number of states have mandated personal finance classes in public school curricula to address perceived deficiencies in financial decision-making competency. Despite the growth of financial and economic education provided in public schools, little is known about the effect of these programs on the credit behaviors of young adults. Using a panel of credit report data, we examine young adults in three states where personal financial education mandates were implemented in 2007: Georgia, Idaho, and Texas. We compare the credit scores and delinquency rates of young adults in each of these states pre- and post-implementation of the education to those of students in a synthetic control state and then bordering states without financial education. We find that young people who are in school after the implementation of a financial education requirement subsequently have higher relative credit scores and lower relative delinquency rates than those in control states.
Keywords: financial literacy, financial education, personal finance, synthetic controls
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