nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2018‒02‒05
three papers chosen by

  1. The Impact of High School Financial Education on Financial Knowledge and Choices: Evidence from a Randomized Trial in Spain By Bover, Olympia; Hospido, Laura; Villanueva, Ernesto
  2. “Voting in the aftermath of a pension reform: the role of financial literacy” By Anna Lo Prete; Elsa Fornero
  3. China Needs Better Credit Data to Help Consumers By Martin Chorzempa

  1. By: Bover, Olympia (Bank of Spain); Hospido, Laura (Bank of Spain); Villanueva, Ernesto (Bank of Spain)
    Abstract: We conducted a randomized controlled trial where 3,000 9th grade students coming from 78 high schools received a financial education course at different points of the year. Right after the treatment, test performance increased by 16% of one standard deviation, treated youths were more likely to become involved in financial matters at home and showed more patience in hypothetical saving choices. In an incentivized saving task conducted three months after, treated students made more patient choices than a control group of 10th graders. Within randomization strata, the main impacts are also statistically significant in public schools, which over-represent disadvantaged students.
    Keywords: financial education, impact evaluation
    JEL: D14 D91 I22 J24
    Date: 2018–01
  2. By: Anna Lo Prete (University of Turin); Elsa Fornero (University of Turin and CeRP-Collegio Carlo Alberto)
    Abstract: Economic reforms affecting people’s lives are generally quite unpopular and may imply an electoral cost. This can derive, among other things, from lack of understanding of the basic elements of reforms. Our paper shows that the electoral cost of a pension reform is significantly lower in countries where the level of financial literacy is higher. The evidence from data on legislative elections held between 1990 and 2010 in 21 advanced countries is robust when we control for macro-economic conditions, demographic factors, and characteristics of the political system. Interestingly, these findings are not robust when we use less specific indicators of human capital – such as general schooling – supporting the view that knowledge of basic economic and financial concepts has distinctive features that may help reduce the electoral cost of reforms having a relevant impact on the life cycle of individuals.
    Date: 2018–01
  3. By: Martin Chorzempa (Peterson Institute for International Economics)
    Abstract: Formidable barriers stand between the modern financial system and the hundreds of millions of Chinese citizens still using costly informal credit. For many, the financial data that could be used to give them a credit score that would lead to a fair priced loan exist but are not being used. This analysis finds that the most difficult barriers cutting these data off from their potential use for greater financial inclusion are the legal and political restrictions on data sharing and use, economic and competitive concerns from data holders, and the technical difficulty of integrating disparate systems. Policies that encourage coordination between public authorities and private actors in finance and technology can go a long way towards making these data available and driving access to credit in China. This shift would not only help borrowers: It would also encourage the needed economic rebalancing towards consumption, increase competition in the financial sector, raise efficiency through better credit allocation, and contribute to sustainable economic growth and social welfare.
    Date: 2018–01

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