nep-fle New Economics Papers
on Financial Literacy and Education
Issue of 2020‒05‒11
four papers chosen by

  1. PISA 2018 results: Are students smart about money? By OECD
  2. Increasing Financial Literacy Among Undergraduate Students. By Montgomery Barreto; Keith Jacks Gamble
  4. Financial Education Affects Financial Knowledge and Downstream Behaviors By Tim Kaiser; Annamaria Lusardi; Lukas Menkhoff; Carly J. Urban

  1. By: OECD
    Abstract: This May sees the release of the results from the third PISA assessment of financial literacy. These results are largely consistent with previous findings, but also go beyond earlier assessments in probing students’ behaviours and attitudes towards money matters (including digital money matters) and their exposure to financial education at school.The Covid-19 crisis has lain bare the economic and financial uncertainty and precarity that many adults face; the 15-year-old students who sit the PISA assessment will soon leave compulsory education and must take this uncertainty into account as they take decisions about further education and career pathways. Proficiency in financial literacy will help students take responsible and well-informed decisions and set them up for financial resilience later in life. Policy makers are encouraged to use the findings and recommendations in this PISA in Focus to foster enhanced financial literacy and responsible financial inclusion.
    Date: 2020–05–07
  2. By: Montgomery Barreto; Keith Jacks Gamble
    Abstract: This study examines the financial literacy levels of students at Middle Tennessee State University and the effectiveness of tools on campus to increase students’ knowledge of basic financial topics and their own student debt. We administer a survey across campus to students in multiple finance classes and to the general student population. Around half of our student respondents answer correctly all of the “Big Three” questions testing financial literacy, a higher proportion answering correctly than the average in several prior studies conducted around the world. We find mixed results regarding our respondents’ understanding of their own student loan debt with some aspects being well understood and others being vastly misunderstood. Our results show that the most effective instrument on campus to improve students’ financial literacy is the completion of a finance course. Respondents who have completed a Middle Tennessee State University finance course are more likely to answer questions on financial topics correctly and to understand their own student loan debt.
    Keywords: Financial Literacy, Student Loans, Education
    JEL: A22
    Date: 2020–04
  3. By: Paulo Silva; Victor Mendes; Margarida Abreu
    Abstract: Using information on mutual fund trades executed from 1998 to 2017 by 31,513 individual investor clients of a major Portuguese financial institution, we study the relationship between the disposition effect, financial literacy and trading experience. We find that mutual fund investors exhibit strong disposition effect. The tendency to hold losers is partially offset with literacy: not only holding a university degree reduces the propensity to hold on to loser funds but also higher financial knowledge and stronger math skills reduce the disposition effect. Literacy also plays a role in shaping the way experience affects this bias. Evidence of the disposition effect persists after accounting for redemption fees, bad emotions, irrational beliefs, market sentiment and the existence of someone to blame.
    Keywords: disposition effect; mutual funds; financial literacy
    JEL: G11
    Date: 2020–04
  4. By: Tim Kaiser; Annamaria Lusardi; Lukas Menkhoff; Carly J. Urban
    Abstract: We study the rapidly growing literature on the causal effects of financial education programs in a meta-analysis of 76 randomized experiments with a total sample size of over 160,000 individuals. The evidence shows that financial education programs have, on average, positive causal treatment effects on financial knowledge and downstream financial behaviors. Treatment effects are economically meaningful in size, similar to those realized by educational interventions in other domains, and are at least three times as large as the average effect documented in earlier work. These results are robust to the method used, restricting the sample to papers published in top economics journals, including only studies with adequate power, and accounting for publication selection bias in the literature. We conclude with a discussion of the cost-effectiveness of financial education interventions.
    JEL: D14 I21
    Date: 2020–04

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.