Published: July 30, 2018

An influential paper by researchers at CU Boulder’s Leeds School of Business continues to be central to the public debate about when financial education improves financial behavior. Leeds Professor, and Director of the Center for Research on Consumer Financial Decision Making, John Lynch is quoted in an August U.S. News and World Report article, “Do Financial Literacy Courses Work?” The article cites Fernandes, Lynch and Netemeyer (2014 Management Science) for a meta-analysis statistically summarizing studies of 90 financial education interventions.

Getting versus not getting some financial education intervention explains on average only 0.1 percent of the variation among people in whether they engage in healthy versus unhealthy financial behaviors. The study finds that effects of financial education on behavior decay in a matter of months after the intervention is over. The lesson for consumers is, “use it or lose it”, and the takeaway for financial educators is that an intervention should be narrowly focused on a specific behavior and close in time to the behavior it is meant to influence. Lynch is quoted in the U.S. News story as being critical of wide-ranging high school courses that are supposed to set a student up for a lifetime of good financial behavior, because the data show that any effects of the educational intervention dissipate to become undetectable inside of two years. If a financial education course covers a wide range of financial behaviors, it is impossible for the education to be “just in time.”

A similar conclusion is reached in a recent German meta-analysis cited in the U.S. News article. The German authors say that financial education can change behavior if it is delivered at a 'teachable moment' which is another label for "just in time." 

The U.S. News story also quotes Lynch for the argument that financial skills are better learned by doing rather than via classroom instruction disconnected from a consumer’s life. The story cites a second Leeds study of financial literacy in couples, comparing the development over the course of a relationship of “household CFOs and non-CFOs.” U.S. News concludes: “The partner who has taken on the "CFO" role increases his or her level of financial literacy, while the partner not managing money may stagnate or even decline in financial competence. The longer the relationship lasts, the greater the gap in financial literacy between the partners," the study shows.