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Assessing the Effectiveness of Financial Coaching: Evidence from the Boston Youth Credit Building Initiative

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  • Alicia S. Modestino
  • Rachel Sederberg
  • Liana Tuller

Abstract

Since the 2008 financial crisis, there has been renewed interest in providing financial education to improve consumer financial decision making, especially among youth. Using a randomized controlled trial, we estimate the causal effects of a financial coaching program for young adults from linked individual‐level administrative credit reports and self‐reported survey responses. Within six months, the treatment group was 10 percentage points more likely to have access to credit compared to the control group. After 18 months, the average credit score was 26 points higher for the treatment group versus the control group, raising the likelihood of achieving a “good” credit rating by 8 percentage points. Consequently, the treatment group was less likely to rely on alternative financial services and paid lower interest rates on car loans. These impacts are largely driven by improvements in self‐efficacy, offering important insights for policymakers seeking to incorporate financial education into youth workforce development programs.

Suggested Citation

  • Alicia S. Modestino & Rachel Sederberg & Liana Tuller, 2019. "Assessing the Effectiveness of Financial Coaching: Evidence from the Boston Youth Credit Building Initiative," Journal of Consumer Affairs, Wiley Blackwell, vol. 53(4), pages 1825-1873, December.
    • Handle: RePEc:bla:jconsa:v:53:y:2019:i:4:p:1825-1873
    DOI: 10.1111/joca.12265
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    Citations

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    Cited by:

    1. Frisancho, Veronica & Herrera, Alejandro & Prina, Silvia, 2023. "Can a mobile-app-based behavioral intervention teach financial skills to youth? Experimental evidence from a financial diaries study," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 595-614.
    2. Julie Birkenmaier & Brandy Maynard & Hannah Shanks & Harly Blumhagen, 2023. "PROTOCOL: Medical‐financial partnerships for improving financial and health outcomes for lower‐income Americans: A systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 19(4), December.
    3. Frank M. Magwegwe & Maurice M. MacDonald & HanNa Lim & Stuart J. Heckman, 2023. "Determinants of financial worry," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 171-221, January.
    4. Julie Birkenmaier & Brandy Maynard & Youngmi Kim, 2022. "Interventions designed to improve financial capability: A systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 18(1), March.
    5. Elisabeth Sinnewe & Gavin Nicholson, 2023. "Healthy financial habits in young adults: An exploratory study of the relationship between subjective financial literacy, engagement with finances, and financial decision‐making," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 564-592, January.
    6. Hayashi, Fumiko & Routh, Aditi & Toh, Ying Lei, 2024. "Heterogeneous unbanked households: Which types of households are more (or less) likely to open a bank account?," Journal of Economics and Business, Elsevier, vol. 129(C).
    7. Elise Frølich Furrebøe & Ellen Katrine Nyhus, 2022. "Financial self‐efficacy, financial literacy, and gender: A review," Journal of Consumer Affairs, Wiley Blackwell, vol. 56(2), pages 743-765, June.
    8. Marco Angrisani & Sergio Barrera & Luisa R. Blanco & Salvador Contreras, 2021. "The racial/ethnic gap in financial literacy in the population and by income," Contemporary Economic Policy, Western Economic Association International, vol. 39(3), pages 524-536, July.
    9. Galariotis, Emilios & Monne, Jerome, 2023. "Basic debt literacy and debt behavior," International Review of Financial Analysis, Elsevier, vol. 88(C).

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