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The Financial Education Fallacy

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  • Lauren E. Willis

Abstract

Research to date does not demonstrate a causal chain from financial education to welfare-enhancing financial behavior, in part due to biases, heuristics, and emotional influences on decisions. Yet the search for effective financial education continues. But it is time to ask whether giving every person effective financial education would make us better off. Two reasons it might not are discussed here. First, the time, expense, and invasion of privacy required would be enormous. Second, such a world would entail a decrease in individual autonomy. Alternative tools could potentially increase household financial welfare and security at lower social and individual expense.

Suggested Citation

  • Lauren E. Willis, 2011. "The Financial Education Fallacy," American Economic Review, American Economic Association, vol. 101(3), pages 429-434, May.
    • Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:429-34
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.429
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    References listed on IDEAS

    as
    1. Ian Hathaway & Sameer Khatiwada, 2008. "Do financial education programs work?," Working Papers (Old Series) 0803, Federal Reserve Bank of Cleveland.
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