Promising Learning Strategies, Interventions, and Delivery Methods in Financial Literacy Education National Endowment for Financial Education® (NEFE®) Annamaria Lusardi Robert Clark Jonathan Fox John Grable Edward Taylor August 3-4, 2010 Implications of a Quarter Century of Research in Personal Finance

National Endowment for Financial Education Key points 2  Financial education can increase knowledge  Financial knowledge can change behavior  Critical role of the workplace to provide financial education  Financial education for adults should be based on adult learning theories  Employer-provided education should be regularly monitored and evaluated  Recognizing the importance of learning outside formal settings

National Endowment for Financial Education Financial education Financial education includes any program or process, be it formal, non-formal, and informal, that addresses the knowledge, attitudes, and/or behavior of an individual toward financial topics and concepts

National Endowment for Financial Education Overview of financial education  A multitude of public and private programs  Main areas: general financial literacy, retirement savings, home ownership, and debt  Limited information about the different content, context, pedagogy, and objectives  The is an emphasis on the deficit model of teaching: adults passively receive and process information  Difficulties in doing evaluation

National Endowment for Financial Education Difficulties in doing evaluation  Measurement issues  Rigorous program evaluation: randomized evaluation, experimental methods, qualitative research  Evaluation not just of change in behavior but also of curricula, pedagogy, and delivery mechanisms  The evaluation needs to be part of the program design

National Endowment for Financial Education Assessment of financial education  Mixed empirical evidence but with “cautious optimism” with respect to changes in knowledge and behavior  Positive effects seem more evident at workplace level  Easier to identify outcomes  Critical junctures  Captive and like audience  Opportunities for informal learning

National Endowment for Financial Education Workplace financial education Two crucial junctures in a worker’s career:  Starting a career: repaying student loans, supporting new family, buying a house… and start planning for retirement  Beginning the transition from work to retirement: deciding how to best use all available resources for imminent retirement

National Endowment for Financial Education New ways to make people save  Lusardi, Keller, and Keller (2008): A planning aid and videos of employees stories were included in the material and shown to new hires at orientation in a group setting  Features of the planning aid: enrollment process broken down in small steps, detailed guidelines for each step, advice to overcome barriers to saving  Large increase in the participation in SRAs (Supplementary Retirement Accounts)

National Endowment for Financial Education Key questions  What elements of this project foster adult learning?  What can be enhanced?  What is generalizable to other adult learning programs?

National Endowment for Financial Education Teaching adults  Adults are active not passive participants in their financial life  Adults have significant life experiences that shape their expectations and goals  Adult learning is shaped both by psychological and socio-cultural factors  Personal experiences (of self and others) help transform perspectives and acquire new viewpoints Transformative learning theory:

National Endowment for Financial Education Core elements of transformative learning  Appreciating individual experience: sharing financial stories by both educators and learners  Videos,  Dialogue, encourage sharing stories  Small groups, encourage sharing financial beliefs  Fostering critical reflection: supportive learning environment, dialogue, exposure to alternative perspectives  Alternative ways of knowing: learners often utilize a see-feel-change sequence rather than rational processes  Visuals, art  Affective learning, get people to talk about their emotions  Role play and drama  Contextual Awareness: locating financial literacy into the personal, social, and economic context of learners  The importance of family, cultural differences (race, gender, sexual orientation, income)

National Endowment for Financial Education Informal learning: learning beyond the program  Most prevalent type of learning among adults is informal learning, which is the learning that transcends formal educational settings/curriculum  Includes: seeking additional information, engaging in dialogue with peers, surfing internet, searching libraries, working with advisors  Includes a variety of settings, practices, and actors  Influenced by learner’s background

National Endowment for Financial Education Facilitating informal learning  Use informal learning activities in financial education  Encourage use of informal learning skills in all other settings to increase financial literacy  Ways to foster informal learning: Small discussion groups Financial activities requiring to use personal experience Information seeking and development of critical skills to assess information Creating clearinghouses on financial literacy Fun activities have greater educational potential

National Endowment for Financial Education Recommendations  Financial education can be made more effective  Many advantages of retirement education programs in the workplace  Importance of personal and socio-economic context of learner: no one-size-fit-all model  Pay attention to adult learning theory  Enhance informal learning