Five Steps to Planning Success. Experimental Evidence from U.S. Households

45 Pages Posted: 27 Mar 2015

See all articles by Aileen Heinberg

Aileen Heinberg

RAND Corporation

Angela Hung

RAND Corporation - Labor and Population

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California; IZA Institute of Labor Economics

Annamaria Lusardi

George Washington University - Department of Accountancy; National Bureau of Economic Research (NBER)

Anya Samek

Center for Economic and Social Research (CESR); University of Southern California - Department of Economics

Joanne Yoong

National University of Singapore (NUS)

Multiple version iconThere are 2 versions of this paper

Date Written: May 31, 2014

Abstract

In this paper, we design and field a low-cost, easily-replicable financial education program called “Five Steps,” covering five basic financial planning concepts that relate to retirement. We conduct a field experiment to evaluate the overall impact of “Five Steps” on a probability sample of the American population. In different treatment arms, we quantify the relative impact of delivering the program through video and narrative formats. Our results show that short videos and narratives (each takes about three minutes) have sizable short-run effects on objective measures of respondent knowledge. Moreover, keeping informational content relatively constant, format has significant effects on other psychological levers of behavioral change: effects on motivation and self-efficacy are significantly higher when videos are used, which ultimately influences knowledge acquisition. Follow-up tests of respondents’ knowledge approximately eight months after the interventions suggest that between one-quarter and one-third of the knowledge gain and about one-fifth of the self-efficacy gains persist. Thus, this simple program has effects both in the short run and medium run.

Keywords: financial education, financial planning

JEL Classification: D14, D91

Suggested Citation

Heinberg, Aileen and Hung, Angela and Kapteyn, Arie and Lusardi, Annamaria and Samek, Anya and Yoong, Joanne, Five Steps to Planning Success. Experimental Evidence from U.S. Households (May 31, 2014). Becker Friedman Institute for Research in Economics Working Paper No. 2585232. Available at SSRN: https://ssrn.com/abstract=2585232 or http://dx.doi.org/10.2139/ssrn.2585232

Aileen Heinberg

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

Angela Hung

RAND Corporation - Labor and Population ( email )

United States

Arie Kapteyn

Dornsife Center for Economic and Social Research - University of Southern California ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States
310-448-5383 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Annamaria Lusardi (Contact Author)

George Washington University - Department of Accountancy ( email )

George Washington University School of Business
Washington, DC 20052
United States

HOME PAGE: http://business.gwu.edu/profiles/annamaria-lusardi/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Anya Samek

Center for Economic and Social Research (CESR) ( email )

635 Downey Way
Los Angeles, CA 90089-3332
United States

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

Joanne Yoong

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

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