Five Steps to Planning Success. Experimental Evidence from U.S. Households

Working Paper No. 20203 While financial knowledge has been linked to improved financial behavior, there is little consensus on the value of financial education, in part because rigorous evaluation of various programs has yielded mixed results. However, given the heterogeneity of financial education...

Full description

Saved in:
Bibliographic Details
Published in:NBER Working Paper Series 2014-06, p.20203
Main Authors: Heinberg, Aileen, Hung, Angela A, Kapteyn, Arie, Lusardi, Annamaria, Anya Savikhin Samek, Yoong, Joanne
Format: Article
Language:English
Subjects:
Behavior
Cost control
Economic theory
Education
Field study
Financial literacy
Financial planning
Households
Intervention
Knowledge
Knowledge acquisition
Participation
Pedagogy
Personal finance
Retirement planning
Savings plans
Self-efficacy
Studies
Success
Citations: Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Working Paper No. 20203 While financial knowledge has been linked to improved financial behavior, there is little consensus on the value of financial education, in part because rigorous evaluation of various programs has yielded mixed results. However, given the heterogeneity of financial education programs in the literature, focusing on "generic" financial education can be inappropriate and even misleading. Lusardi (2009) and others argue that pedagogy and delivery matter significantly. In this paper, we design and field a low-cost, easily-replicable financial education program called "Five Steps," covering five basic financial planning concepts that relate to retirement. We conduct a field experiment to evaluate the overall impact of "Five Steps" on a probability sample of the American population. In different treatment arms, we quantify the relative impact of delivering the program through video and narrative formats. Our results show that short videos and narratives (each takes about three minutes) have sizable short-run effects on objective measures of respondent knowledge. Moreover, keeping informational content relatively constant, format has significant effects on other psychological levers of behavioral change: effects on motivation and self-efficacy are significantly higher when videos are used, which ultimately influences knowledge acquisition. Follow-up tests of respondents' knowledge approximately eight months after the interventions suggest that between one-quarter and one-third of the knowledge gains and about one-fifth of the self-efficacy gains persist. Thus, this simple program has effects both in the short run and medium run.
ISSN:0898-2937
DOI:10.3386/w20203