The Effect of Product-Specific Financial Education on Purchase Decision

52 Pages Posted: 8 Feb 2020 Last revised: 7 Apr 2020

See all articles by Olga Balakina

Olga Balakina

School of Management and Economics, Lund University; Lund University - Department of Economics

Vimal Balasubramaniam

Queen Mary University of London

Aditi Dimri

University of Warwick

Renuka Sane

National Institute of Public Finance and Policy

Date Written: April 06, 2020

Abstract

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

Balakina, Olga and Balasubramaniam, Vimal and Dimri, Aditi and Sane, Renuka, The Effect of Product-Specific Financial Education on Purchase Decision (April 06, 2020). Available at SSRN: https://ssrn.com/abstract=3519845 or http://dx.doi.org/10.2139/ssrn.3519845

Olga Balakina

School of Management and Economics, Lund University ( email )

Box 117
Lund, SC Skane S221 00
Sweden

Lund University - Department of Economics ( email )

P.O. Box 7082
S-220 07 Lund
Sweden

Vimal Balasubramaniam (Contact Author)

Queen Mary University of London ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
United Kingdom

Aditi Dimri

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Renuka Sane

National Institute of Public Finance and Policy ( email )

18/2, Satsang Vihar Marg
New Delhi, 110067
India

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