Given these figures, it’s not surprising that more than 40 percent of U.S. adults would give themselves a grade of C, D, or F for their personal finance knowledge. These figures come from the 2009 Consumer Financial Literacy Survey by HarrisInteractive, which surveyed more than 1,000 U.S. adults last year.
Given this dim view of personal finance in our nation, it’s clear that many households would benefit from programs that provide financial education. But do these programs actually help families improve their financial situations?
A new study reveals the answer is yes. Two researchers from the University of Wisconsin-Madison pulled together evaluations from 41 financial education and counseling programs in a systematic review. Their article is published in the Fall 2010 issue of the Journal of Consumer Affairs. They used a research process called a qualitative systematic literature review to summarize evaluations that measured financial education and counseling’s impacts on financial knowledge and behavior.
The majority of studies cited in their review conclude financial education and counseling are beneficial and hold the promise of improving financial knowledge and facilitating behavior change. But the study also notes that many of these evaluations share methodological weaknesses including selection bias and measurement issues. Many of the programs also do not utilize an explicit theory or framework for behavior change, which would lend precision to both program development and the measurement of program impacts, the authors wrote.
They encourage researchers and educators who run these programs to pay more attention to theory-based evaluations and invest in randomized field experiments may be fruitful.
Here at Cornell Cooperative Extension, we offer classes to help families develop a household spending plan, save energy and reduce their energy bills and use credit wisely through a program called EmPower New York. The free workshops are offered in 46 counties and sponsored by the New York State Energy Research and Development Authority (NYSERDA).
EmPower is doing its part to collect viable data on the programs’ effectiveness. This year, they’re conducting phone surveys with the Survey Research Institute at Cornell to determine the extent of behavior change for those who’ve participated in the workshop. They’re expecting results sometime in June.