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Margaret Miller - 2014 Symposium on Financial Education in Korea

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This presentation by Margaret Miller was made at the High-level Global Symposium on Financial Education: Promoting Long-term Savings and Investments in Korea which explored policies and good practices …

This presentation by Margaret Miller was made at the High-level Global Symposium on Financial Education: Promoting Long-term Savings and Investments in Korea which explored policies and good practices for supporting long-term savings and investments through financial education and financial consumer protection. Find out more at http://www.oecd.org/daf/fin/financial-education/globalsymposiumonfinancialeducationforlong-termsavingsandinvestments.htm

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  • Details: all subsequent graphs also use 91 observations91 total studies (82 papers)42 retirement studies15 long-term studies34 short-term studiesDetails on studies performed in the U.S. - Short-term savings: 59% from the U.S.Long-term savings: 40% from the U.S.Retirement: 93% from the U.S.
  • Details: -64 studies from the U.S.- 7 OECD (5 Mexico, 1 Chile, 1 Australia)-20 Non-OECD (3 India, 3 Nigeria, 2 Philippines, 2 South Africa, 2 Bolivia, 1 Ghana, 1 Brazil, 1 Kenya, 1 Indonesia, 1 Dominican Republic, 1 Qatar, 1 Peru, 1 China)
  • Examples of other delivery channels: DVD, computer based, live play among middle school students. Large majority of the other/mixed category involved multiple delivery channels.
  • Details:There were roughly equal proportions of impactful interventions at the 10% level, but at the 5% level, over two-thirds of studies were significant with a social network compared to 58% that were significant with no social network.  At the 1% level, 43% of studies were significant with a social network compared to 33% that were significant with no social network. Take-away: There is a positive association between a social network and an effective intervention for savings and retirement, although the level of robustness is yet to be determined.

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  • 1. Can you teach someone to be financially capable? Resultsfrom meta-analysis of the impact evaluation literature February 27, 2014 HIGH-LEVEL GLOBAL SYMPOSIUM ON FINANCIAL EDUCATION Margaret Miller Senior Economist, Financial Inclusion and Infrastructure Practice The World Bank Group
  • 2. Organization for Talk I. Literature review for financial literacy / capability II. Introduction to / rationale for meta-analysis III. Descriptive statistics on the data IV. Discussion of meta-analysis results V. Concluding remarks
  • 3. Motivation for work on financial literacy / capability • Significant body of evidence that people are making financial mistakes (Shui & Ausubel 2004; Gross & Souleles 2002; Firestone, Van Order and Zorn 2007) • Research suggests that less financially literate / knowledgeable consumers are more prone to making financial errors (Lusardi & Tufano 2009; Stango & Zinman 2009) • Regulations and consumer protection can help address some of these problems but there are limits (Gine and Mazer 2013; Christelis, Jappelli and Padula 2010; Willis 2011) • This suggests a role for efforts to increase financial knowledge and skills – but can this be done effectively?
  • 4. Literature reviews focus on different studies and provide inconclusive results Pearson Correlation Table References M artin 2007 H athawayand K hatiw ada2008 M cCorm ick 2009Agarw aletal2010 Collinsand O ’Rourke2010 G aleand Levine2010 H astings,M adrian,Skim m yhorn 2012 Xu and Zia 2012 Lusardiand M itchell2013 Martin 2007 1.000 (1.000) 0.416 1.000 (0.173) (1.000) -0.067 0.001 1.000 (0.004) (0.000) (1.000) 0.118 0.097 -0.017 1.000 (0.014) (0.009) (0.000) (1.000) 0.161 0.104 0.026 0.425 1.000 (0.026) (0.011) (0.001) (0.181) (1.000) 0.171 0.190 -0.088 0.174 0.047 1.000 (0.029) (0.036) (0.008) (0.030) (0.002) (1.000) -0.057 0.009 -0.060 0.075 0.036 0.084 1.000 (0.003) (0.000) (0.004) (0.006) (0.001) (0.007) (1.000) -0.077 -0.099 -0.065 -0.088 -0.100 -0.083 -0.175 1.000 (0.006) (0.010) (0.004) (0.008) (0.010) (0.007) (0.031) (1.000) -0.104 -0.038 -0.155 -0.105 -0.167 0.039 -0.002 -0.217 1.000 (0.011) (0.001) (0.024) (0.011) (0.028) (0.002) (0.000) (0.047) (1.000) Total Number of References 44 35 45 82 57 61 100 132 187 Xu andZia 2012 Lusardi and Mitchell 2013 Agarwal et al 2010 Gale andLevine 2010 Hathaway and Khatiwada 2008 Martin 2007 Collins and O’Rourke 2010 McCormick 2009 Hastings, Madrian, Skimmyhorn 2012
  • 5. Our approach: first focus more narrowly on interventions then cast a wide net • Papers were included if they discussed the impact of a financial literacy / capability intervention • Papers were identified through a variety of approaches: • Search of peer-reviewed articles in Econlit (search terms financial capability, financial literacy and financial education) • Including all papers from leading literature surveys published over the past 5 years • Impact evaluation papers funded through the Russia Trust Fund for Financial Education and Literacy
  • 6. 6% 9% 2% 6% 75% 2% Region in which Intervention Conducted (n=188) Africa Asia Europe Latin America USA Other
  • 7. 54% 9% 5% 3% 6% 3% 18% 3% 0% 10% 20% 30% 40% 50% 60% Course taught in person Individual Counseling Mass Media Phone Print Online Mixed Other Intervention Channel (n=188)
  • 8. Difficulties in using meta-analysis for this research question • Diverse interventions across many dimensions • Type of intervention • Duration and intensity of exposure to intervention • Topic / objective of intervention • Target population • Lack of uniformity in defining outcomes • Lack of statistical rigor / information including many studies with small sample sizes • Comparability of effect sizes is difficult • Clustering and additional controls vary across studies • Actual effect sizes/impact depend on control group means
  • 9. Results of the meta-analysis • Comparable information only available for a few outcomes (all binary variables) • Savings • Retirement savings • Default on loan • Record keeping • Information also available on financial literacy test scores but not comparable due to diverse tests, scoring scales
  • 10. NOTE: Weights are from random effects analysis Overall (I-squared = 54.5%, p = 0.051) Drexler Fischer Schoar Authors Bruhn Leão et al Bruhn Ibarra McKenzie Berg & Zia Cole Sampson Zia Doi McKenzie Zia 2011 Date 2013 2012 2013 2011 2012 Dominican Rep Country Brazil Mexico South Africa Indonesia Indonesia 15 Intensity 36 4 26 2 13 1 Channel 1 7 3 1 1 0.03 (0.00, 0.06) 0.14 (-0.02, 0.30) ES (95% CI) 0.05 (0.04, 0.06) 0.03 (-0.01, 0.06) -0.03 (-0.09, 0.03) 0.01 (-0.07, 0.09) 0.10 (0.00, 0.20) 100.00 3.73 % Weight 36.13 24.33 15.98 11.54 8.29 0.03 (0.00, 0.06) 0.14 (-0.02, 0.30) ES (95% CI) 0.05 (0.04, 0.06) 0.03 (-0.01, 0.06) -0.03 (-0.09, 0.03) 0.01 (-0.07, 0.09) 0.10 (0.00, 0.20) 100.00 3.73 % Weight 36.13 24.33 15.98 11.54 8.29 0-.297 0 .297 Papers testing savings behavior after financial education intervention
  • 11. NOTE: Weights are from random effects analysis Overall (I-squared = 87.7%, p = 0.000) Hung Yoong Muller Authors Beshears, Choi, Laibson, Madrian, Milkman Bernheim & Garret Lusardi and Mitchell - ALP article 2010 2003 Date 2011 2003 2007 USA USA Country USA USA USA Varied Varied Intensity One letter sent Varied Seminars 2 1 Channel 5 7 NA 0.08 (0.01, 0.16) 0.06 (0.01, 0.11) 0.09 (-0.06, 0.24) ES (90% CI) -0.04 (-0.07, -0.01) 0.12 (0.07, 0.18) 0.23 (0.13, 0.33) 100.00 % 22.98 12.98 Weight 24.21 22.23 17.60 0.08 (0.01, 0.16) 0.06 (0.01, 0.11) 0.09 (-0.06, 0.24) ES (90% CI) -0.04 (-0.07, -0.01) 0.12 (0.07, 0.18) 0.23 (0.13, 0.33) 100.00 % 22.98 12.98 Weight 24.21 22.23 17.60 0-.327 0 .327 Papers testing retirement savings behavior after intervention
  • 12. NOTE: Weights are from random effects analysis Overall (I-squared = 69.1%, p = 0.012) Sonobe Suzuki Otsuka Nam Mano Akoten Otsuka Sonobe Bruhn Ibarra McKenzie Gibson McKenzie Zia Authors Doi Mckenzie Zia 2011 2010 2012 2012 Date 2012 Vietnam Ghana / Kenya Mexico Australia/NZ Country Indonesia NA 45 4 2 Intensity 13 1 1 7 1 Channel 1 0.04 (-0.00, 0.09) 0.06 (-0.00, 0.12) 0.18 (0.05, 0.31) 0.01 (-0.03, 0.04) -0.05 (-0.11, 0.02) ES (90% CI) 0.09 (0.04, 0.14) 100.00 21.11 9.16 27.17 19.07 % Weight 23.49 0.04 (-0.00, 0.09) 0.06 (-0.00, 0.12) 0.18 (0.05, 0.31) 0.01 (-0.03, 0.04) -0.05 (-0.11, 0.02) ES (90% CI) 0.09 (0.04, 0.14) 100.00 21.11 9.16 27.17 19.07 % Weight 23.49 0-.314 0 .314 Papers testing record keeping behaviors after intervention
  • 13. NOTE: Weights are from random effects analysis Overall (I-squared = 87.6%, p = 0.000) Berg & Zia Bruhn Ibarra McKenzie Gine Mansuri Agarwal et al Authors 2013 2012 2011 2010 Date South Africa Mexico Pakistan USA Country 26 4 46 35 Intensity 3 7 1,2 1 Channel -0.02 (-0.06, 0.02) 0.04 (-0.04, 0.11) 0.02 (-0.01, 0.05) -0.02 (-0.04, -0.00) -0.09 (-0.12, -0.06) ES (90% CI) 100.00 16.83 26.81 % 28.82 27.54 Weight -0.02 (-0.06, 0.02) 0.04 (-0.04, 0.11) 0.02 (-0.01, 0.05) -0.02 (-0.04, -0.00) -0.09 (-0.12, -0.06) ES (90% CI) 100.00 16.83 26.81 % 28.82 27.54 Weight 0-.115 0 .115 Papers testing loan defaults after intervention
  • 14. Focus on Savings and Retirement Interventions
  • 15. Assessing the findings • The small sample sizes that we ultimately have for the meta- analysis limit our ability to draw conclusions • Effect sizes are not comparable as typically data are not available for this estimation from the published works • Studies using RCTs show limited impact of financial education interventions at best • With these caveats, some insights do emerge:
  • 16. Assessing the findings • Meta-analysis suggests that financial education can impact some financial behaviors: • Increase saving in general and retirement saving in particular • Promote record keeping • Descriptive analysis of savings and retirement interventions shows impact across a much larger portion of the literature than is included in the meta-analysis • Results also suggest that it may be more useful in some circumstances than others • Not found to be significant factor for avoiding default – may be due to importance of circumstances beyond borrower’s control (health, loss of job, etc.) • Some surprises too – for example the intensity (hours of exposure) of the interventions was found to have statistical significance only for record-keeping • not conclusive evidence but worth further research
  • 17. For the future • More attention to cost:benefit ratio: Virtually no discussion of cost of the interventions or alternative methods to achieve the desired outcomes (Cole, Sampson, Zia 2011 is exception) • Importance of strengthening / expanding use of rigorous evaluation methods • Potential value from defining outcome variables in common terms (including use of binary dependent variables) to facilitate comparisons • Importance of reporting more complete statistical information • Value from developing / contributing to a registry for financial literacy interventions