The Effect of Financial Education on Students' Consumer Choices: Evidence from a Randomized Experiment

Abstract

Financial education is often considered to be a necessary condition in order to stimulate better consumer choices. We investigate this claim by analyzing the impact of a financial education course on consumer choices made by 688 students of the 8th and 9th grade. We combine a randomized controlled trial with a discrete choice experiment to analyze how financial education and other critical factors of a purchase decision like price, credit availability, information on product quality, and promotion affect consumer decisions at a young age. We find that students favor purchase options with free gifts and positive consumer reviews. They also prefer cash payments over credit. However, we do not find evidence that this behavior is triggered by financial education. Financial education does not automatically result in better consumer choices, even if the financial education course increased students' financial literacy.

Keywords: Financial education; Consumer Behavior; Randomized controlled trial; Discrete choice experiment

JEL Classification: G53; I24; I21