What Does Financial Literacy Training Teach Us?

This paper uses data from a finance-related theme park located at Junior Achievement in Los Angeles to explore how financial education changes investment, financing, and consumer behavior. In the Finance Park, students were assigned fictitious life situations and asked to create household budgets for these roles. Some students received a 19-hour financial literacy curriculum before going to the park, and some did not. After controlling for demographic variables, we show that the treatment effects of the financial literacy program are strong. Students who experienced training were more frugal, delayed gratification, paid off debt faster, and relied less on credit financing. However, these same students purchased less comprehensive health insurance, exposing themselves to greater financial risk and wealth volatility in the future. This implies that training may not be extrapolated to related circumstances, and may lead to unintended consequences. Students who had attended training showed greater up-take of decision support that was offered in the park, which indicates that decision support and financial literacy training are complements, not substitutes.