The literature points to financial literacy as an essential driver of financial inclusion, decision-making, and well-being. To support this view, many public and private parties set up in-person financial education programs, find linkage with economic behavior and the best way to promote sound financial habits. The COVID-19 pandemic and the need for social distancing forced the rise of new methods which can have both positive and/or negative multiplier effects on learning and behavior never studied before and that we aim to address.
This project aims to identify the most effective delivery method of financial education programs comparing in-person vs. online teaching methods. Through this comparison, we can investigate whether (and possibly, how much) learning and behavior are affected by the way the same course is delivered.
Mainstream literature stresses the positive linkage between higher financial literacy and sound financial behavior. The research also aims to measure the impact of financial education programs (however delivered) on intertemporal choices and individual beliefs about debt sustainability and public finance concepts.
Finally, to further investigate the effect of financial literacy on Generation Z's behavior, we aim to exploit the critical role of peer effects in a controlled environment as the lab. Through an incentivized RCT lab experiment, we will disentangle the effects of learning and peer effect's on behavioral changes looking at students' intertemporal choices' preferences.
Despite the huge attention that financial literacy has raised in the social science and policy debates, we still have a limited knowledge of the most cost-effective methods to spread it. In addition, few studies are actually taking into account the consequences on behavior, and no one is considering peer effects and intertemporal choices. This project will innovate the literature in several substantial ways.
1. Financial literacy is recognized as the most effective skill to avoid and prevent financial expensive mispractices. However, the cost-benefit analysis leads the agenda of policymakers. Sconti (2020) reveals that an in-person financial course is more expensive but its impact is long-lasting compared to a digitized one. Following this recent insight, this study will be the first to further investigate the effect of real-time distance learning.
2. Financial education not only increases knowledge but also better financial habits. This will be the first study to show the potential differential impact of distance learning on financial behavior. The novelty of our approach is to further exploit Lührmann et al.'s (2018) approach, taking into account financial decision-making among a different target, much more financially exposed, such as university students.
3. In addition, financially literate people are also more likely to be financially included. Citizens to be completely financially included need to understand public finance tools whose effects are directly experimented with. To the best of our knowledge, this study will be the first to exploit the effect of financial literacy on public finance concept comprehension.
4. Financial literacy is by itself very effective in improving financial habits. However, there is huge evidence reporting peer comparisons' positive effects (D¿Acunto et al., 2019; 2020). Besides, the incremental design of our experiment leads to a natural step in the lab to verify a boosting effect of peers in making incentivized financial decisions.
Our findings help to identify strategies to cope with technology and financial well-being and to lead policy-makers evidence-based agenda for a more financially literate and included society.
References
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Lu¿hrmann, M., Serra-Garcia, M., Winter, J., (2018). "The Impact of Financial Education on Adolescents' Intertemporal Choices." American Economic Journal: Economic Policy, Vol. 10 (3), Pages: 309-332.
Montagnoli, A., Moro, M., Panos, G., Wright, R. (2017), ¿Financial literacy and attitudes to redistribution¿, IZA Discussion Papers 10633, Institute of Labor Economics (IZA).
Sconti, A., (2020) "Financial Literacy in Italy: What works among millennials most" (13 January 2020), Working Paper Series Department of Economics - University of Verona WP 1/2020.
Thaler, R., (2020) "What's next for Nudging and Choice Architecture?" Organizational Behavior and Human Decision Processes. https://doi.org/10.1016/j.obhdp.2020.04.003