IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_11187.html
   My bibliography  Save this paper

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

Author

Listed:
  • Luis Oberrauch
  • Tim Kaiser

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

  • 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.
    • Handle: RePEc:ces:ceswps:_11187
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11187.pdf
    Download Restriction: no
    ---><---

    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. 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.
    7. 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).
    8. 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.
    9. 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).
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. 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.
    17. John A. List, 2020. "Non est Disputandum de Generalizability? A Glimpse into The External Validity Trial," NBER Working Papers 27535, National Bureau of Economic Research, Inc.
    18. Kaiser, Tim & Menkhoff, Lukas, 2020. "Financial education in schools: A meta-analysis of experimental studies," Economics of Education Review, Elsevier, vol. 78(C).
    19. Kaiser, Tim & Menkhoff, Lukas, 2022. "Active learning improves financial education: Experimental evidence from Uganda," Journal of Development Economics, Elsevier, vol. 157(C).
    20. Kaiser, Tim & Lusardi, Annamaria, 2024. "Financial Literacy and Financial Education: An Overview," IZA Discussion Papers 16926, Institute of Labor Economics (IZA).
    21. 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.
    22. 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.
    23. 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).
    24. 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.
    25. Corsini, Lorenzo & Giannelli, Gianna Claudia, 2021. "Economics education and financial literacy acquisition: Evidence from a field experiment," Journal of Behavioral and Experimental Finance, Elsevier, vol. 32(C).
    26. Fenella Carpena & Shawn Cole & Jeremy Shapiro & Bilal Zia, 2017. "The ABCs of Financial Education," World Bank Publications - Reports 26068, The World Bank Group.
    27. 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.
    28. 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.
    29. 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. 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).
    2. Kaiser, Tim & Lusardi, Annamaria, 2024. "Financial Literacy and Financial Education: An Overview," IZA Discussion Papers 16926, Institute of Labor Economics (IZA).
    3. 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.
    4. Kaiser, Tim & Menkhoff, Lukas, 2018. "Active Learning Improves Financial Education:," Rationality and Competition Discussion Paper Series 131, CRC TRR 190 Rationality and Competition.
    5. 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.
    6. Kaiser, Tim & Menkhoff, Lukas, 2022. "Active learning improves financial education: Experimental evidence from Uganda," Journal of Development Economics, Elsevier, vol. 157(C).
    7. 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.
    8. 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).
    9. 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.
    10. Paraboni, Ana Luiza & da Costa, Newton, 2021. "Improving the level of financial literacy and the influence of the cognitive ability in this process," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 90(C).
    11. 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.
    12. Callis, Zoe & Gerrans, Paul & Walker, Dana L. & Gignac, Gilles E., 2023. "The association between intelligence and financial literacy: A conceptual and meta-analytic review," Intelligence, Elsevier, vol. 100(C).
    13. Bu, Di & Hanspal, Tobin & Liao, Yin & Liu, Yong, 2020. "Financial literacy and self-control in FinTech: Evidence from a field experiment on online consumer borrowing," SAFE Working Paper Series 273, Leibniz Institute for Financial Research SAFE.
    14. 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.
    15. Joana Elisa Maldonado & Kristof De Witte & Koen Declercq, 2022. "The effects of parental involvement in homework: two randomised controlled trials in financial education," Empirical Economics, Springer, vol. 62(3), pages 1439-1464, March.
    16. Grohmann, Antonia & Klühs, Theres & Menkhoff, Lukas, 2018. "Does financial literacy improve financial inclusion? Cross country evidence," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 111, pages 84-96.
    17. Sholevar, Maryam & Harris, Laurence, 2019. "Mind the gap: A discussion paper on Financial Literacy, Financial behaviour and Financial Education : Is there any Gender Gap?," OSF Preprints b7zd6, Center for Open Science.
    18. Grohmann, Antonia & Hübler, Olaf & Kouwenberg, Roy & Menkhoff, Lukas, 2021. "Financial literacy: Thai middle-class women do not lag behind," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    19. Andrej Cupák & Pirmin Fessler & Maria Silgoner & Elisabeth Ulbrich, 2021. "Exploring Differences in Financial Literacy Across Countries: The Role of Individual Characteristics and Institutions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(2), pages 409-438, December.
    20. Kaiser, Tim & Oberrauch, Luis, 2021. "Economic education at the expense of indoctrination? Evidence from Germany," EconStor Preprints 245801, ZBW - Leibniz Information Centre for Economics.

    More about this item

    Keywords

    digital intervention; financial literacy; Financial knowledge; financial education; robo-advisor; ETFs;
    All these keywords.

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ces:ceswps:_11187. 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: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    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.