The Effect of Product-Specific Financial Education on Purchase Decision
52 Pages Posted: 8 Feb 2020 Last revised: 7 Apr 2020
Date Written: April 06, 2020
We estimate the impact of a product-specific education video on the purchase decision of a suboptimal insurance product in Delhi, India. The video highlights questions individuals should ask before making a purchase and provides specific rules of thumb to evaluate the answers to those questions. Our intervention results in a three percentage points (eight percent of the base rate) decline in the intention to purchase the sub-optimal product. Our effects are driven mainly by the rise in product feature knowledge, suggesting that individuals are more informed after watching the rules-of-thumb video, making better choices. Augmenting Gabaix and Laibson (2006) with a scalable, not-for-profit, cost-efficient financial education suggests that such a product-specific approach has the potential to unshroud information, more broadly, for all consumers in this market.
Keywords: financial education, financial literacy, household finance
JEL Classification: G22, G5, G52
Suggested Citation: Suggested Citation