The classroom is where many Americans learn to read, write, perform arithmetic and speak a foreign language. So can it also be the place where they master important financial concepts such as how to manage debt, improve credit, take out student loans and plan for retirement?
For many politicians, educators and financial literacy advocates, this question has created a push for financial education in elementary, high school and college classrooms, community centers and through counseling, seminars and workshops.
But, some researchers say, those aims may be misguided. Financial literacy can’t be taught in a sit-down course like, say, geometry or German, they argue. “Thus far, the empirical work doesn’t show much of an effect [from financial literacy courses],” says Lauren Willis, professor at Loyola Law School in Los Angeles. “Some findings are that there are negative effects sometimes, presumably because of overconfidence.”
For example, a 2014 paper from three professors looked at the results from nearly 170 papers covering more than 200 scientific studies on financial literacy and found that financial education did little to improve subsequent financial behaviors. “Our meta-analysis revealed that financial education interventions studied explained only about 0.1 percent of the variance in the financial behaviors studied,” the authors concluded.
“It’s a hugely wasteful enterprise, these high school courses and things like that,” says John G. Lynch, co-author of the study and senior associate dean for faculty and research at Leeds School of Business at the University of Colorado—Boulder. “By the time [students] would actually act on what they learn, it’s gone.”
But not all researchers agree that integrating financial literacy in the classroom is a misplaced effort. Financial literacy belongs in the schools, says Annamaria Lusardi, academic director of the Global Financial Literacy Excellence Center at George Washington University’s School of Business in the District of Columbia. “I’m not understanding why there is such an opposition to financial education. I think it’s becoming more ideological than research,” she says.