Financial Education for the Disadvantaged? A Review

38 Pages Posted: 24 Apr 2018  

Horst Entorf

Goethe University Frankfurt - Research Center SAFE; IZA Institute of Labor Economics

Jia Hou

Goethe University Frankfurt

Multiple version iconThere are 2 versions of this paper

Date Written: April 20, 2018

Abstract

In contrast to the popularity of financial education interventions worldwide, studies on the economic effects of those interventions report mixed results. With a focus on the effect on disadvantaged groups, we review both the theoretical and empirical findings in order to understand why this discrepancy exists. The survey first highlights that it is necessary to distinguish between the concepts of, and the relationships between, financial education, financial literacy and financial behavior to identify the true effects of financial education. The review addresses possible biases caused by third factors such as numeracy. Next, we review theories on financial literacy which make clear that the effect of financial education interventions is heterogeneous across the population. Last, we look closely at main empirical studies on financial education targeted at the migrants/immigrants, the low-income earners and the young, and compare their methodologies. There seems to be a positive effect on short-term financial knowledge and awareness of the young, but there is no proven evidence on long-term behavior after being grown up. Studies on financial behavior of migrants and immigrants show almost no effect of financial education.

Keywords: Financial Education, Financial Literacy, Inequality, Program Evaluation

JEL Classification: G28, G41, I24, I25, I28

Suggested Citation

Entorf, Horst and Hou, Jia, Financial Education for the Disadvantaged? A Review (April 20, 2018). SAFE Working Paper No. 205. Available at SSRN: https://ssrn.com/abstract=3167709 or http://dx.doi.org/10.2139/ssrn.3167709

Horst Entorf (Contact Author)

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

IZA Institute of Labor Economics

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

Jia Hou

Goethe University Frankfurt ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

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