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Financial Literacy and Choices

Paper Session

Friday, Jan. 4, 2019 2:30 PM - 4:30 PM

Atlanta Marriott Marquis, M301
Hosted By: American Economic Association & Economic Education Committee
  • Chair: Julie Hotchkiss, Federal Reserve Bank of Atlanta

The Effects of Financial Education on Student Financial Aid Choices

Carly Urban
,
Montana State University
Christiana Stoddard
,
Montana State University

Abstract

Students entering college have limited financial experience while making complex borrowing decisions. This paper examines a policy lever that may improve these decisions: required personal finance education in high school. Our difference-in-difference strategy compares students experiencing requirements based on their state and year of graduation. Using data on financial aid decisions made by college freshmen at four-year institutions from the National Postsecondary Student Aid Study, the results suggest financial education graduation requirements increase aid applications and federal loans, while decreasing private loans and the likelihood of holding credit card balances. The federal loan increases are concentrated among students from less affluent family backgrounds, while the private loan decrease comes from a separate population of students from more affluent families. The mandates do not change institutional choices or college attendance.

An Analysis of Financial Literacy among Italian Students

Annamaria Lusardi
,
George Washington University

Abstract

In this project, we use the latest 2015 OECD’s Programme for International Student Assessment (PISA) data to study the factors that have influenced and changed financial knowledge among adolescents in Italy. Utilizing this data, which comprises a large sample of students aged 15 in 17 countries, including Italy, we have a unique opportunity to study changes in the level of students’ financial literacy relative to 2012 and the factors influencing financial literacy across various countries. Italy has shown significant improvements in mean levels of financial literacy and provides an interesting study to understand what factors influence financial knowledge. In particular, empirical analyses will focus on four main factors: the role of personal characteristics, the role of parents, the role of schools, and the role of teachers. This also includes an analysis of other countries that participated in the data collection of 2015, emphasizing how Italy compares to these countries. Finally, we include implications and recommendations for developing policies and programs to reinforce financial education in schools.

The Impact of School-Based Financial Education on High School Students and their Teachers

Veronica Frisancho
,
Inter-American Development Bank

Abstract

Relying on a large-scale experiment, this paper studies the potential of school-based financial education for youth. Financial education lessons yield impressive effects on students' and teachers' financial skills (0.15SD and 0.32SD, respectively) and lead to sizable improvements on self-control and shopping habits among students. The intervention also raises teachers' likelihood to save by 10\%, effect mostly driven by a 22\%-increase in their probability to save formally. Longer-term credit bureau data fails to identify any effect on students' financial behavior but shows that teachers become 13\% more likely to get a bank loan and 15\% less likely to be delinquent.

The Effects of Undergraduate Debt and Education on Employment, Further Education, and Household Decisions

William Bosshardt
,
Florida Atlantic University
William B. Walstad
,
University of Nebraska-Lincoln

Abstract

This study investigates the loan-paying behavior of college graduates at one year and four to five years after graduation. It also studies the loan-taking behavior of college graduates who decide to continue their education in graduate school within five years after their college graduation. The data for the analysis is based on a representative national sample of U.S. college graduates that was collected for the Baccalaureate and Beyond survey of the National Center for Educational Statistics at the U.S. Department of Education. The study examines the effects of different undergraduate majors and instruction in economic and financial concepts on both the student loan-paying and loan-taking behavior while controlling for other major demographic variables and influences.
Discussant(s)
Jamie Weathers
,
Western Michigan University
Tim Kaiser
,
University of Koblenz-Landau
Wendy Stock
,
Montana State University
Paul Grimes
,
Pittsburg State University
JEL Classifications
  • A2 - Economic Education and Teaching of Economics