Does Financial Education Impact Financial Behavior, and if so, When?

In a meta-analysis of 115 experimental impact evaluations, we find that financial education significantly impacts financial behavior and, to an even larger extent, financial literacy.

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Lucas Menkhoff (Deutsches Institut für Wirtschaftsforschung e.V.)

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Lukas Menkhoff is the Head of the Department of International Economics at DIW Berlin and Professor of Economics at the Humboldt-University of Berlin. He is also a member of the ‘Globalization and Development’ Research Training Group (Göttingen, Hannover), and the Collaborative Research Center ‘Rationality and Competition’ (Munich, Berlin). His research focus is on International Finance and Financial Development.

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In a meta-analysis of 115 experimental impact evaluations, we find that financial education significantly impacts financial behavior and, to an even larger extent, financial literacy. These results also hold for the subsample of randomized experiments (RCTs). However, intervention impacts are highly heterogeneous: Financial education is less effective in low- and medium income countries; some target groups, such as low-income clients, or specific behaviors, such as borrowing, are difficult to influence; additionally mandatory financial education appears to be less effective. Thus, success depends crucially on increasing training intensity and offering financial education at a “teachable moment.”