IDEAS home Printed from https://ideas.repec.org/a/eee/beexfi/v43y2024ics2214635024000698.html
   My bibliography  Save this article

Financial Education or Incentivizing Learning-By-Doing? Evidence from an RCT with Undergraduate Students

Author

Listed:
  • Oberrauch, Luis
  • Kaiser, Tim

Abstract

We study the effects of digital financial education interventions on undergraduate students’ financial knowledge in a small-scale RCT. We test the substitutability or complementarity of two treatments: an online video financial education treatment and an incentive-based approach where students are issued pre-paid voucher cards worth 50 EUR to register with a broker specializing in robo-advised investment in Exchange Traded Funds (ETFs). Three months after the intervention, the video treatment enhanced financial knowledge scores by more than 0.5 standard deviations. Conversely, the vouchers showed no effect. The findings suggest that subsidies encouraging robo-advised investment into ETFs cannot substitute direct financial education in our setting, and there is no evidence for complementarity between these interventions.

Suggested Citation

  • Oberrauch, Luis & Kaiser, Tim, 2024. "Financial Education or Incentivizing Learning-By-Doing? Evidence from an RCT with Undergraduate Students," Journal of Behavioral and Experimental Finance, Elsevier, vol. 43(C).
  • Handle: RePEc:eee:beexfi:v:43:y:2024:i:c:s2214635024000698
    DOI: 10.1016/j.jbef.2024.100954
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2214635024000698
    Download Restriction: no

    File URL: https://libkey.io/10.1016/j.jbef.2024.100954?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Itzhak Ben-David & Francesco A. Franzoni & Rabih Moussawi, 2016. "Exchange Traded Funds (ETFs)," Swiss Finance Institute Research Paper Series 16-64, Swiss Finance Institute.
    2. Maya Escueta & Andre Joshua Nickow & Philip Oreopoulos & Vincent Quan, 2020. "Upgrading Education with Technology: Insights from Experimental Research," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 897-996, December.
    3. Brugiavini, Agar & Cavapozzi, Danilo & Padula, Mario & Pettinicchi, Yuri, 2020. "On the effect of financial education on financial literacy: evidence from a sample of college students," Journal of Pension Economics and Finance, Cambridge University Press, vol. 19(3), pages 344-352, July.
    4. Martin Lettau & Ananth Madhavan, 2018. "Exchange-Traded Funds 101 for Economists," Journal of Economic Perspectives, American Economic Association, vol. 32(1), pages 135-154, Winter.
    5. Kaiser, Tim & Lusardi, Annamaria & Menkhoff, Lukas & Urban, Carly, 2022. "Financial education affects financial knowledge and downstream behaviors," Journal of Financial Economics, Elsevier, vol. 145(2), pages 255-272.
    6. Tim Kaiser & Annamaria Lusardi, 2024. "Financial Literacy and Financial Education: An Overview," CESifo Working Paper Series 11070, CESifo.
    7. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    8. Calcagno, Riccardo & Monticone, Chiara, 2015. "Financial literacy and the demand for financial advice," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 363-380.
    9. 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.
    10. Billari, Francesco C. & Favero, Carlo A. & Saita, Francesco, 2023. "Online financial and demographic education for workers: Experimental evidence from an Italian Pension Fund," Journal of Banking & Finance, Elsevier, vol. 151(C).
    11. Annamaria Lusardi & Olivia S. Mitchell, 2023. "The Importance of Financial Literacy: Opening a New Field," Journal of Economic Perspectives, American Economic Association, vol. 37(4), pages 137-154, Fall.
    12. Tim Kaiser & Lukas Menkhoff, 2017. "Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?," The World Bank Economic Review, World Bank, vol. 31(3), pages 611-630.
    13. Agasisti, Tommaso & Barucci, Emilio & Cannistrà, Marta & Marazzina, Daniele & Soncin, Mara, 2023. "Online or on-campus? Analysing the effects of financial education on student knowledge gain," Evaluation and Program Planning, Elsevier, vol. 98(C).
    14. Gunhild Berg & Bilal Zia, 2017. "Harnessing Emotional Connections to Improve Financial Decisions: Evaluating the Impact of Financial Education in Mainstream Media," Journal of the European Economic Association, European Economic Association, vol. 15(5), pages 1025-1055.
    15. James J. Choi & David Laibson & Brigitte C. Madrian, 2010. "Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds," The Review of Financial Studies, Society for Financial Studies, vol. 23(4), pages 1405-1432, April.
    16. van Rooij, Maarten & Lusardi, Annamaria & Alessie, Rob, 2011. "Financial literacy and stock market participation," Journal of Financial Economics, Elsevier, vol. 101(2), pages 449-472, August.
    17. Lusardi, Annamaria & Samek, Anya & Kapteyn, Arie & Glinert, Lewis & Hung, Angela & Heinberg, Aileen, 2017. "Visual tools and narratives: new ways to improve financial literacy," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(3), pages 297-323, July.
    18. Sconti, Alessia, 2022. "Digital vs. in-person financial education: What works best for Generation Z?," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 300-318.
    19. Alejandro Drexler & Greg Fischer & Antoinette Schoar, 2014. "Keeping It Simple: Financial Literacy and Rules of Thumb," American Economic Journal: Applied Economics, American Economic Association, vol. 6(2), pages 1-31, April.
    20. Francesco D’Acunto & Nagpurnanand Prabhala & Alberto G Rossi, 2019. "The Promises and Pitfalls of Robo-Advising," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1983-2020.
    21. Panu Kalmi & Jaana Rahko, 2022. "The effects of game-based financial education: New survey evidence from lower-secondary school students in Finland," The Journal of Economic Education, Taylor & Francis Journals, vol. 53(2), pages 109-125, March.
    22. Kaiser, Tim & Menkhoff, Lukas, 2020. "Financial education in schools: A meta-analysis of experimental studies," Economics of Education Review, Elsevier, vol. 78(C).
    23. Kaiser, Tim & Menkhoff, Lukas, 2022. "Active learning improves financial education: Experimental evidence from Uganda," Journal of Development Economics, Elsevier, vol. 157(C).
    24. Ida Chak & Karen Croxson & Francesco D’Acunto & Jonathan Reuter & Alberto G. Rossi & Jonathan M. Shaw, 2022. "Improving Household Debt Management with Robo-Advice," NBER Working Papers 30616, National Bureau of Economic Research, Inc.
    25. Angel, Stefan, 2018. "Smart tools? A randomized controlled trial on the impact of three different media tools on personal finance," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 74(C), pages 104-111.
    26. Batty, Michael & Collins, J. Michael & O’Rourke, Collin & Odders-White, Elizabeth, 2020. "Experiential financial education: A field study of my classroom economy in elementary schools," Economics of Education Review, Elsevier, vol. 78(C).
    27. Shawn Cole & Thomas Sampson & Bilal Zia, 2011. "Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets?," Journal of Finance, American Finance Association, vol. 66(6), pages 1933-1967, December.
    28. Bilal Zia, 2023. "When is financial education successful? Taking stock of the new wave of field evidence," Chapters, in: Valentina Hartarska & Robert J. Cull (ed.), Handbook of Microfinance, Financial Inclusion and Development, chapter 7, pages 119-133, Edward Elgar Publishing.
    29. Paolo Abarcar & Rashmi Barua & Dean Yang, 2020. "Financial Education and Financial Access for Transnational Households: Field Experimental Evidence from the Philippines," Economic Development and Cultural Change, University of Chicago Press, vol. 69(1), pages 373-404.
    30. Orazio Attanasio & Matthew Bird & Lina Cardona-Sosa & Pablo Lavado, 2019. "Freeing Financial Education via Tablets: Experimental Evidence from Colombia," NBER Working Papers 25929, National Bureau of Economic Research, Inc.
    31. Francesco D'Acunto & Alberto G. Rossi, 2023. "Robo-Advice: Transforming Households into Rational Economic Agents," Annual Review of Financial Economics, Annual Reviews, vol. 15(1), pages 543-563, November.
    32. Litterscheidt, Rouven & Streich, David J., 2020. "Financial education and digital asset management: What's in the black box?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    33. William L. Skimmyhorn & Evan R. Davies & David Mun & Brian Mitchell, 2016. "Assessing financial education methods: Principles vs. rules-of-thumb approaches," The Journal of Economic Education, Taylor & Francis Journals, vol. 47(3), pages 193-210, July.
    34. Rodriguez-Raga, Santiago & Martinez-Camelo, Natalia, 2022. "Game, guide or website for financial education improvement: Evidence from an experiment in Colombian schools," Journal of Behavioral and Experimental Finance, Elsevier, vol. 33(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luis Oberrauch & Tim Kaiser, 2024. "Financial Education or Incentivizing Learning-by-Doing? Evidence from an RCT with Undergraduate Students," CESifo Working Paper Series 11187, CESifo.
    2. Oberrauch, Luis & Kaiser, Tim, 2024. "Digital Interventions to Increase Financial Knowledge: Evidence from a Pilot RCT," IZA Discussion Papers 16811, Institute of Labor Economics (IZA).
    3. Lusardi, Annamaria & Kaiser, Tim, 2024. "Financial literacy and financial education: An overview," CEPR Discussion Papers 19185, C.E.P.R. Discussion Papers.
    4. Sconti, Alessia & Caserta, Maurizio & Ferrante, Livio, 2024. "Gen Z and financial education: Evidence from a randomized control trial in the South of Italy," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 112(C).
    5. Kaiser, Tim & Menkhoff, Lukas, 2022. "Active learning improves financial education: Experimental evidence from Uganda," Journal of Development Economics, Elsevier, vol. 157(C).
    6. Tim Kaiser & Lukas Menkhoff, 2017. "Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?," The World Bank Economic Review, World Bank, vol. 31(3), pages 611-630.
    7. Gabriele Iannotta & Marta Cannistrà & Tommaso Agasisti, 2024. "It's never too late to be financially literate: Evaluating a financial education intervention for adults in Italy," Journal of Consumer Affairs, Wiley Blackwell, vol. 58(2), pages 397-431, June.
    8. Tim Kaiser & Lukas Menkhoff, 2018. "Active Learning Fosters Financial Behavior: Experimental Evidence," Discussion Papers of DIW Berlin 1743, DIW Berlin, German Institute for Economic Research.
    9. Kaiser, Tim & Menkhoff, Lukas, 2018. "Active Learning Improves Financial Education:," Rationality and Competition Discussion Paper Series 131, CRC TRR 190 Rationality and Competition.
    10. Pan, Xuefeng & Su, Qin & Lei, Haibo, 2024. "How motivations and costs affect financial knowledge learning? Evidence from a large-scale FinTech experiment in China," China Economic Review, Elsevier, vol. 88(C).
    11. Sconti, Alessia, 2022. "Digital vs. in-person financial education: What works best for Generation Z?," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 300-318.
    12. Azra Zaimovic & Anes Torlakovic & Almira Arnaut-Berilo & Tarik Zaimovic & Lejla Dedovic & Minela Nuhic Meskovic, 2023. "Mapping Financial Literacy: A Systematic Literature Review of Determinants and Recent Trends," Sustainability, MDPI, vol. 15(12), pages 1-30, June.
    13. Kaiser, Tim & Lusardi, Annamaria & Menkhoff, Lukas & Urban, Carly, 2022. "Financial education affects financial knowledge and downstream behaviors," Journal of Financial Economics, Elsevier, vol. 145(2), pages 255-272.
    14. Calderone, Margherita & Fiala, Nathan & Mulaj, Florentina & Sadhu, Santadarshan & Sarr, Leopold, 2014. "When Can Financial Education Affect Savings Behavior? Evidence From A Randomized Experiment Among Low Income Clients of Branchless Banking in India," Working Papers 32, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    15. Grohmann, Antonia & Klühs, Theres & Menkhoff, Lukas, 2018. "Does financial literacy improve financial inclusion? Cross country evidence," World Development, Elsevier, vol. 111(C), pages 84-96.
    16. Sandro Ambuehl & B. Douglas Bernheim & Annamaria Lusardi, 2022. "Evaluating Deliberative Competence: A Simple Method with an Application to Financial Choice," American Economic Review, American Economic Association, vol. 112(11), pages 3584-3626, November.
    17. Gerrans, Paul, 2021. "Undergraduate student financial education interventions: Medium term evidence of retention, decay, and confidence in financial literacy," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    18. Cziriak, Marius & Bucher-Koenen, Tabea & Alessie, Rob, 2024. "Beyond knowledge: Confidence and the Gender Gap in Financial Literacy," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302421, Verein für Socialpolitik / German Economic Association.
    19. Manuel Salas‐Velasco & Dolores Moreno‐Herrero & José Sánchez‐Campillo, 2021. "Teaching financial education in schools and students' financial literacy: A cross‐country analysis with PISA data," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4077-4103, July.
    20. Kaiser, Tim & Menkhoff, Lukas, 2020. "Financial education in schools: A meta-analysis of experimental studies," Economics of Education Review, Elsevier, vol. 78(C).

    More about this item

    Keywords

    Financial literacy; Financial knowledge; Financial education; Robo-advisor; ETFs;
    All these keywords.

    JEL classification:

    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:beexfi:v:43:y:2024:i:c:s2214635024000698. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-behavioral-and-experimental-finance .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.