CHAPTER 10: The Efficacy Of Financial Education in the Early Grades: Results From a Statewide Program

Financial literacy represents a new rock star in the field of educational reform. The financial community has touted it as a panacea for the country’s low savings rates, credit delinquencies—indeed, the entire financial crisis. Even before the crisis, financial institutions funneled a lot of resources into providing financial education to both youth and adults. The financial services industry and nonprofits have increased their curriculum offerings; school administrators and school boards implemented standards and mandatory courses with financial literacy components; churches and community nonprofits increased the provision of financial education in their outreach.

Research on financial literacy does not offer the clear-cut solutions that these efforts would imply. In the effort to draw straight lines from program to outcome (especially long-term outcome), the pencil can often leave the paper. Research has focused on financial education of adults and youths; on the level of knowledge and the degree to which knowledge increased after financial education (i.e., value-added effects); the effects (on both knowledge-level and value-added) of particular financial literacy curricula, and the effects of teacher training. Many issues are confounded, and many results are contradictory. To a large extent, these empirical contradictions are due to inadequate study design and attempts to compare results across different groups and/or disparate treatments.