Financial Education Matters: Testing the Effectiveness of Financial Education Across 76 Randomized Experiments

Abstract

Do financial education programs affect financial knowledge and behaviors? We examine this question using a meta-analysis that incorporates studies from the past decade, which saw a rapid increase in financial education research. When examining data from 76 financial education randomized experiments across 33 countries covering over 160,000 individuals, we find that financial education improves both financial knowledge and financial behavior. Further, we see that financial education is cost-effective. On average, financial education program costs are deemed “low.” The magnitude of the effect of financial education on financial behaviors is deemed “medium,” while the effect on financial knowledge is considered “large.” Financial education positively impacts nearly all financial behaviors we studied (that is, behaviors related to budgeting, saving, credit and insurance). The effects of the financial education interventions on financial knowledge are comparable to interventions designed to improve math and reading scores. Comparing our findings to a popular 2014 meta-analysis on the same topic, our findings suggest that financial education interventions are 3 to 5 times as effective in improving financial knowledge and behaviors than the earlier study found.