Redefining Financial Capability<br />April 21, 2011<br />Follow @EARN on Twitter<br />
Redefining Financial Capability<br />Your Host<br />Sunaena Chhatry<br />Public Policy Manager	<br />EARN<br />Sunaena@ear...
If you are unable to hear us speaking right now, call-in using your telephone.<br />Dial: 1 (805) 309-0022<br />Access Cod...
Download paper at www.earn.org<br />www.earn.org                         www.facebook.com/earnorg                         ...
www.earn.org                         www.facebook.com/earnorg                         www.twitter.com/earn<br />5<br />
Agenda		<br />Welcome & Introductions<br />Presentation by Ben Mangan (30 min)<br />Q&A (20 min)<br />www.earn.org        ...
Join the Conversation on Twitter	<br />We’ll be tweeting key takeaways throughout the presentation on Twitter.<br />To par...
Redefining Financial Capability<br />Presenter<br />Ben Mangan<br />President & CEO <br />EARN<br />Ben@earn.org<br />www....
Evolution of Financial Capability<br />“Financial Literacy”?<br />Growing body of data suggests financial education alone ...
New Definition of Financial Capability<br />CFSI has pioneered an important new definition of Financial Capability:<br />w...
Defining Financial Self-Efficacy<br />“Self-Efficacy” is one's belief in one's ability to succeed in specific situations<b...
A New Dimension for Financial Capability<br />www.earn.org                         www.facebook.com/earnorg               ...
The Research Basis for Financial Self-Efficacy<br />EARN analyzed 487 baseline surveys, and 54 surveys at Year 1 <br />Fac...
EARN’s Predictive Model of Financial Behavior<br />www.earn.org                         www.facebook.com/earnorg          ...
Five Key Findings Related to Financial Self-Efficacy<br />Financial Self-Efficacy was the pivotal predictor of fewer finan...
An Uncomfortable Question<br />www.earn.org                         www.facebook.com/earnorg                         www.t...
Evidence and Current Standards Disconnected<br />	Norms + rules for distributing resources to low income people designed f...
How Can You Foster Financial Self-Efficacy?<br />Embrace “plain vanilla” savings opportunities<br />Conduct a Financial Se...
Financial Self Efficacy in Action<br />SERVICES: Financial Coaching most effective when anchored by program designed that ...
Implementing Financial Self-Efficacy in Design<br />EARN Matched Account Example:<br />www.earn.org                       ...
Emerging Research Questions<br />What’s in the secret sauce?<br />What is the optimal combination?<br />Can we “manualize”...
Implications for Public Policy<br />www.earn.org                         www.facebook.com/earnorg                         ...
Collaboration Can Spark Progress<br />Many worthy experiments <br />Need to advance the science behind assertions with RCT...
Q & A<br />www.earn.org                         www.facebook.com/earnorg                         www.twitter.com/earn<br /...
Thank You!<br />www.earn.org                         www.facebook.com/earnorg                         www.twitter.com/earn...
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Redefining Financial Capability: EARN's Model of Self-Efficacy

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Popular wisdom suggests that if you want to succeed financially, you need two things: financial knowledge and access to appropriate financial products. This combination is commonly referred to as financial capability. But a groundbreaking paper from the EARN Research Institute points out that these two factors only lead to financial success when paired with a third component: financial self-efficacy.

The new research illuminates a crucial gap in how most financial education experts believe people manage their money successfully. In light of EARN’s research findings, the definition of financial capability needs to be expanded to include self-efficacy.

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  • https://www1.gotomeeting.com/join/260026864/106416087
  • a concept stemming from research by noted Cognitive Psychologist Albert Bandura.EARN’s research suggests that financial self efficacy undergirds financial capability Research found that financial self efficacy drove many of the key behavior changes required for people to advance economically.
  • Note the p values of .0001 indicating the high level of statistical significance
  • Acknowledge that there were a distinct set of inputs that created this effect – from combo of product and fmt, to strong culture prizing choice in the name of the core value of dignity and scale.We hope to test the way CFSI’s indicators of financial capability and financial Self-Efficacy combine to drive change
  • Inherent tension between what we know drives financial self efficacy and financial capability, and how resources are distributed. Deeply paternalistic – for some reasonable reasons, and some reasons that are really questionable from a normative standpoint.
  • What are the distinct inputs that led to our outputs and outcomes? Which were related to product? Program? Culture? EARN’s target market
  • Redefining Financial Capability: EARN's Model of Self-Efficacy

    1. 1. Redefining Financial Capability<br />April 21, 2011<br />Follow @EARN on Twitter<br />
    2. 2. Redefining Financial Capability<br />Your Host<br />Sunaena Chhatry<br />Public Policy Manager <br />EARN<br />Sunaena@earn.org<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />2<br />
    3. 3. If you are unable to hear us speaking right now, call-in using your telephone.<br />Dial: 1 (805) 309-0022<br />Access Code: 294-618-758<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />3<br />
    4. 4. Download paper at www.earn.org<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />4<br />
    5. 5. www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />5<br />
    6. 6. Agenda <br />Welcome & Introductions<br />Presentation by Ben Mangan (30 min)<br />Q&A (20 min)<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />6<br />
    7. 7. Join the Conversation on Twitter <br />We’ll be tweeting key takeaways throughout the presentation on Twitter.<br />To participate, visit twitter.com/EARN and include the hashtag#fincapin your message.<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />7<br />
    8. 8. Redefining Financial Capability<br />Presenter<br />Ben Mangan<br />President & CEO <br />EARN<br />Ben@earn.org<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />8<br />
    9. 9. Evolution of Financial Capability<br />“Financial Literacy”?<br />Growing body of data suggests financial education alone is ineffective <br />Influencing behaviors powers change<br />“Financial Capability” is apt new term of art<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />9<br />
    10. 10. New Definition of Financial Capability<br />CFSI has pioneered an important new definition of Financial Capability:<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />10<br />
    11. 11. Defining Financial Self-Efficacy<br />“Self-Efficacy” is one's belief in one's ability to succeed in specific situations<br />Self-efficacy can play a major role in how one approaches goals, tasks, and challenges<br />EARN’s research led to us to adapt the concept with the term “Financial Self-Efficacy”<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />11<br />
    12. 12. A New Dimension for Financial Capability<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />12<br />Financial Self Efficacy<br />
    13. 13. The Research Basis for Financial Self-Efficacy<br />EARN analyzed 487 baseline surveys, and 54 surveys at Year 1 <br />Factor analysis of sets of questions related to:<br />Financial Knowledge<br />Financial Problems<br />Financial Self-Efficacy<br />All sets of questions internally consistent<br />High levels of statistical significance<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />13<br />
    14. 14. EARN’s Predictive Model of Financial Behavior<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />14<br />
    15. 15. Five Key Findings Related to Financial Self-Efficacy<br />Financial Self-Efficacy was the pivotal predictor of fewer financial problems<br />Financial Self-Efficacy grew as financial knowledge grew<br />When financial happiness grew, perceived financial stress decreased <br />Increases in knowledge led to increases in self confidence, leading to more successful outcomes, and increased financial Self-Efficacy.<br />We believe that increasing Financial Self-Efficacy will increase Financial Capability.<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />15<br />
    16. 16. An Uncomfortable Question<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />16<br /> Do our current industry standards impede the growth of Financial Self-Efficacy + Financial Capability?<br />
    17. 17. Evidence and Current Standards Disconnected<br /> Norms + rules for distributing resources to low income people designed for control + fraud prevention – not Financial Self-Efficacy or Financial Capability.<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />17<br />
    18. 18. How Can You Foster Financial Self-Efficacy?<br />Embrace “plain vanilla” savings opportunities<br />Conduct a Financial Self-Efficacy “audit”<br />Foster a culture skeptical of unjustified paternalism<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />18<br />
    19. 19. Financial Self Efficacy in Action<br />SERVICES: Financial Coaching most effective when anchored by program designed that lets clients foster Financial Self-Efficacy.<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />19<br />PRODUCTS: EARN re-launching new offering this year that was redesigned as a result of our research findings <br />
    20. 20. Implementing Financial Self-Efficacy in Design<br />EARN Matched Account Example:<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />20<br />Testing for Financial Self-Efficacy and Financial Capability<br />
    21. 21. Emerging Research Questions<br />What’s in the secret sauce?<br />What is the optimal combination?<br />Can we “manualize” the inputs?<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />21<br />
    22. 22. Implications for Public Policy<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />22<br />
    23. 23. Collaboration Can Spark Progress<br />Many worthy experiments <br />Need to advance the science behind assertions with RCTs<br />Funders, practitioners and government need to build the case for what works<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />23<br />
    24. 24. Q & A<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />24<br />
    25. 25. Thank You!<br />www.earn.org www.facebook.com/earnorg www.twitter.com/earn<br />25<br />Sunaena Chhatry<br />Public Policy Manager <br />EARN<br />Sunaena@earn.org<br />@Sunaena<br />Ben Mangan<br />President & CEO<br />EARN<br />Ben@earn.org<br />@BenMangan<br />

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