Economists typically gauge the value of financial education by examining how it affects consumer behaviors. But the best financial choices for consumers depend on a mix of objective facts and subjective judgments – and one size rarely fits all.
Summary
Financial education in the workplace tends to be brief and laden with motivational rhetoric. Prior studies of such interventions have focused on knowledge acquisition and behavior change, but the criteria used to measure beneficial outcomes suffer from serious conceptual and practical limitations. This study, in contrast, employs a novel method for assessing the quality of post-intervention decision making. The authors focus on mistakes arising from misconceptions about opportunities, while also accounting for underlying differences in individual preferences.
Key Insights
- Conventional criteria for evaluating financial education interventions can yield misleading conclusions about the intervention’s effects on decision making.
- The substance of financial education, as opposed to the rhetoric used, accounts for performance improvements on literacy tests.
- Motivational rhetoric drives behavior change, but rhetoric can have the unintended effect of distracting from substance and promoting an indiscriminate one-size-fits-all response.
