The Effect of Financial Education on Financial Literacy and Financial Behavior

A Review of Meta-Analyses

Abstract

In this review, we summarize the results of 5 methodologically rigorous meta-analyses on financial education, financial literacy and financial behavior. We find that financial education significantly impacts financial literacy and financial behavior. These results hold for the studies using RCTs. However, the impacts on financial behavior are miniscule. Financial literacy significantly impacts financial behavior, but the effects are very small for the studies using instrumental variables. The effects on improving savings and budgeting are much larger than on debt related behavior. The effects for low-income consumers are smaller. The effects for children and youth are higher or at least identical to those for adults. The effects decay over time. The effects increase with intensity (hours taught), and this increase declines with intensity. Brief financial education at short delays has equal to more intensive financial education at long delays. Finally, we discuss implications for future research and policy to help consumer decisions.