Research performed by Melanie Lührmann und Marta Serra-Garcia und Joachim Winter out of the University of Munich Department of Economics suggests that financial literacy programs administered to teenage children had significant impact in a variety of areas. In their paper, The effect of financial literacy training: Evidence from a experiment with German high-school children, draws several conclusions that make a compelling case that financial literacy programs can be highly effective.
They sum up their work with the following statement:
While the jury is still out when it comes to the long-run behavioral impacts of financial literacy training for high-school students, the results of this study show that one such program is quite successful in raising teenagers' interest in financial matters and their subjective knowledge. Along with the objective knowledge and hypothetical behavior changes that we can already document over very short time horizons, these fi ndings suggest that a even relatively short financial literacy training has the potential to help teenagers become more informed and sovereign consumers.
The study details a variety ways financial literacy positively impacts teenage children. These included an increased awareness of the purpose of advertisement to sell products, increased interest and awareness of financial topics and improved financial knowledge. Also noted was a decreased self-assessment as an impulse shopper.
Maybe Not Surprising
This may come as no surprise to many readers. It would stand to reason that financial literacy training would have some positive impact on individual financial knowledge and decision-making. Yet, it is terribly difficult to effect change and to gain the ear of policy-makers without strong research showing that a benefit actually exists.
This study offers just such research and suggests that financial literacy training may have the impact many people have stated it would have. If you've been pushing for financial literacy education for your children, or if you're a financial planner who offers this type of education, use this research as support for your position. It's one thing to say you think it will be beneficial, but entirely another thing to have academic research supporting that claim.
Update: only moments before hitting “Publish” on this blog post, I received a Google Alert with another piece of research which seems to contradict this study, suggesting that financial literacy training actually does NOT have much impact. I’ll be reviewing and offering some thoughts on that research in this space in the near future.