Working Paper: NBER ID: w20203
Authors: Aileen Heinberg; Angela A. Hung; Arie Kapteyn; Annamaria Lusardi; Anya Savikhin Samek; Joanne Yoong
Abstract: While financial knowledge has been linked to improved financial behavior, there is little consensus on the value of financial education, in part because rigorous evaluation of various programs has yielded mixed results. However, given the heterogeneity of financial education programs in the literature, focusing on "generic" financial education can be inappropriate and even misleading. Lusardi (2009) and others argue that pedagogy and delivery matter significantly. In this paper, we design and field a low-cost, easily-replicable financial education program called "Five Steps," covering five basic financial planning concepts that relate to retirement. We conduct a field experiment to evaluate the overall impact of "Five Steps" on a probability sample of the American population. In different treatment arms, we quantify the relative impact of delivering the program through video and narrative formats. Our results show that short videos and narratives (each takes about three minutes) have sizable short-run effects on objective measures of respondent knowledge. Moreover, keeping informational content relatively constant, format has significant effects on other psychological levers of behavioral change: effects on motivation and self-efficacy are significantly higher when videos are used, which ultimately influences knowledge acquisition. Follow-up tests of respondents' knowledge approximately eight months after the interventions suggest that between one-quarter and one-third of the knowledge gains and about one-fifth of the self-efficacy gains persist. Thus, this simple program has effects both in the short run and medium run.
Keywords: financial education; financial literacy; behavioral economics; retirement planning
JEL Codes: D14; D91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| knowledge acquisition (D83) | self-efficacy (D83) |
| knowledge retention (O34) | decay over time (C41) |
| video formats (L82) | knowledge acquisition (D83) |
| video formats (L82) | self-efficacy (D83) |
| video formats (L82) | knowledge retention (O34) |
| video formats (L82) | psychological barriers to learning (D91) |