Financial Education and Financial Literacy by Income and

Education Groups
Jamie Wagner a

This study examines associations between financial education and financial literacy among people with different
levels of education and income using a large, national data set, the 2015 National Financial Capability Study.
This study estimates whether financial education in high school, college, or through an employer, is associated
with a person’s financial literacy score. Results show that people who received any financial education are likely
to have higher financial literacy scores compared to those without financial education. Financial education has
larger predicted probabilities for those with lower education and income, suggesting that financial education is
especially important for this demographic group. This research emphasizes a need to teach financial education
to people whom previous research suggests lacks financial literacy the most.

Keywords: education, financial education, financial literacy, income

F
inancial literacy is as important a skill as read- Mitchell (2014) suggested that financial problems could be
ing, writing, and math skills are, and thus everyone avoided if people were more financially literate. Because
should have knowledge about it in order to survive of widespread personal finance problems and the impor-
the complex financial world. However, research shows that tance placed on financial literacy, numerous education pro-
the United States has low levels of financial literacy, espe- grams have been developed to increase financial literacy.
cially for people with lower education and incomes (Lusardi McCormick (2009) noted in her review that prior to 2004,
& Mitchell, 2014). Lusardi, Mitchell, and Curto (2012) limited studies were done for younger kids but that dur-
found that college students were more financially knowl- ing 2004–2008 (the study’s focus) many programs were
edgeable compared with high school students. Furthermore, created. This study also notes that adult and community-
Monticone (2010) found that people with higher incomes based financial education was too new and there was lim-
were more likely to acquire financial knowledge on their ited data available. Since 2008, even more emphasis has
own while those with lower incomes found it too costly or been made for financial education at all levels. For exam-
did not have the same incentives to do so. Therefore, as a ple, high schools in many states incorporate personal finance
way to mitigate long-term financial problems, it is especially standards, courses, or exams (Council for Economic Educa-
important to estimate the effects of financial education on tion, 2016), colleges offer seminars for students to help them
groups that research suggests have low levels of financial manage credit (Borden et al., 2008), and employers offer
literacy. workshops for employees (Clark, Morrill, & Allen, 2012;
Kim, 2016).
Problems resulting from not being financially literate
include difficulty managing personal debt and student Previous studies have looked at the effects of financial
loans (Council for Economic Education, 2016; Lusardi & education on financial literacy. One recent study done by
Mitchell, 2014), having low saving rates (Bernheim, Gar- Xiao and O’Neill (2016) found that financial education
rett, & Maki, 2001; Lusardi & Mitchell, 2014), and engag- improved several different measures of financial literacy
ing in poor credit card behaviors leading to lasting negative (a subjective measure, an objective measure, financial
effects (Borden, Lee, Serido, & Collins, 2008). Lusardi and behaviors, perceived financial literacy, and an index

a
Assistant Professor of Economics and Director, Department of Economics, Center for Economic Education, University of Nebraska at Omaha, 6708
Pdf_Folio:132
Pine St, Omaha, NE 68135. E-mail: jfwagner@unomaha.edu

132 Journal of Financial Counseling and Planning, Volume 30, Number 1, 2019, 132-141
© 2019 Association for Financial Counseling and Planning Education®
http://dx.doi.org/10.1891/1052-3073.30.1.132
measure). The main difference between past studies and this and found that taking a personal finance course significantly
current study is the emphasis of studying how financial edu- reduced the likelihood that a college student engaged in
cation is related to financial literacy for people with lower risky financial credit card behaviors (Lyons, 2008).
education and income. Focusing on people with lower edu-
cation and income levels, this study supports existing liter- As it becomes more expectant that employees exercise
ature by estimating how financial education offered in high responsibility in making major financial decisions, includ-
school, college, through an employer, or any combination ing those about their retirement, workplace financial edu-
of the three, has an impact on a person’s financial literacy cation has become more popular. Bernheim and Garrett
score. In this article, a person’s financial literacy score is (2003) estimated how workplace financial education affects
the dependent variable, while demographic characteristics employees’ saving rates, with results suggesting that the
and financial education are independent variables. The main availability of financial education had a positive effect on
results suggest that financial education is positively corre- a person’s saving behaviors. Another study used a national
lated with higher financial literacy scores. Results also show sample of 1,486 employees from a large insurance com-
that financial education has a stronger impact on people with pany and found that those who participated in the Finan-
lower education levels and income. cial Awareness Workshop had higher financial literacy
levels (Hira & Loibl, 2005).
Literature Review and Hypotheses
Many people understand that financial education is needed While research mostly focuses on one type of financial edu-
at all ages in order to avoid costly mistakes that can lead to cation (i.e., high school, college, or as an adult), few stud-
long-term impacts on younger people. Some literature about ies have looked at all three. One study, however, estimated
high school financial education examines how specific cur- the effects of high school, college, and adult financial edu-
riculums affect financial knowledge and behaviors. Walstad, cation using the 2012 National Financial Capability Study
Rebeck, and MacDonald (2010) found that the financial cur- (NFCS; Xiao & O’Neill, 2016). The authors found a positive
riculum, Financing Your Future (FYF), increased student relationship between financial education, financial knowl-
knowledge of personal finance. Another study by Asarta, edge (both objective and subjective), and financial behav-
Hill, and Meszaros (2014) used the Keys to Financial Suc- iors. While this study used a similar data set and examined
cess curriculum and found that the curriculum increased all three financial education types the article did not split the
high school students’ financial knowledge by 61% between population by demographic groups as it was not the focus of
the pretest and posttest. The most significant change came their study.
from the most difficult topics: credit history and records, and
the rights and responsibilities of buyers, sellers, and credi- Although previous studies mostly focus on the whole pop-
tors. Another study, estimated the effects of the High School ulation, other studies estimate potential effects of financial
Financial Planning Program (HSFPP) and found that the education on those with lower education and income, which
curriculum had positive effects on financial knowledge and is what the focus of this study is. The studies that look at
financial behaviors (Danes, Rodriguez, & Brewton, 2013). different subgroups in the population do not break down the
effects of different types of financial education on finan-
Other studies estimated how financial education affects cial literacy as this study does. Lusardi and Mitchell (2007,
college students. One study found that a college personal 2014) reviewed relevant research and found that financial
finance course increased a person’s investment knowledge literacy increases with more education. In other words, peo-
which then increased the likelihood of saving. In the same ple who are more educated are more likely to be more finan-
token, taking a high school, or both a high school and cially knowledgeable. Similarly, Lusardi et al. (2012) found
college, personal finance course did not increase the per- that people who are more educated have higher levels of
son’s investment knowledge (Peng, Bartholomae, Fox, & financial literacy even when controlling for demographics.
Cravener, 2007). Information about investment knowledge Other studies have found that people with lower incomes
may be more relevant for college students which explains are less likely to be financially literate (Lyons, Chang,
why the college course was the only effective course. & Scherpf, 2006; Mauldin, Henager, Bowen, & Cheang,
Another study used a sample from ten Midwest campuses
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2016; Monticone, 2010; Zhan, Anderson, & Scott, 2006).

Journal of Financial Counseling and Planning, Volume 30, Number 1, 2019 133
Furthermore, people with lower income saw that a lack of Variables
financial knowledge to be a barrier to financial behaviors The 2015 survey asked people about the financial edu-
specifically saving (Mauldin, et al., 2016). cation that they may have received. The questions asked
whether or not financial education was offered by a school
Lusardi (2003) studied the effects of retirement seminars or college you attended, or a workplace that you were
offered to individuals age 51–61 and found that those employed at. If they said yes, the next question asked if they
with lower education and income benefit more from the received it through high school, college, an employer, or
financial education. The current study builds on existing the military. People were only asked about financial edu-
research by using a large national data set to examine the cation through college or the military if they were a cur-
effects of financial education, offered through high schools, rent college student, college graduate, or if they responded
colleges, employers, or some combination, on financial that they were currently active in or retired from the mil-
literacy for people with lower education and incomes. Pre- itary. For this analysis, employer and military financial
vious research found that people with lower education and education were combined, given that time spent in the mil-
incomes have lower levels of financial literacy, accentuating itary is another form of employment, revealing a small
the importance of this study, as it shows that financial edu- number of respondents who received military financial
cation can be especially beneficial for these two population education.
subgroups.
These questions were used to create the financial edu-
It is hypothesized that financial education would improve cation variables for the analysis. There are multiple
financial literacy which is consistent with much of previous categories for coding an individual in the case that a per-
research (Lusardi & Mitchell, 2014). Furthermore, Monti- son responds that they received more than one form of
cone (2010) found that people lower incomes found it too financial education. The omitted category is that a person
costly and with fewer incentives than wealthier people to received no financial education. The eight categories of
acquire financial literacy on their own. Therefore, because financial education are: (a) high school only, (b) college
those who have lower incomes are not going out and acquir- only, (c) employer only, (d) high school and college, (e)
ing the information on their own, it would be expected that high school and employer, (f) college and employer, (g)
financial education would be especially beneficial to this high school, college, and employer, and (h) no financial
group. While similar research has not been done specif- education.
ically looking at the costs of acquiring financial knowl-
edge for those with lower education it’s expected to have The data set also provided a unique look at finan-
a similar relationship with financial education—those with cial literacy by asking financial literacy questions in the
lower education would be more affected by financial edu- survey. The 2015 survey included six questions, includ-
cation because they have fewer means of learning the infor- ing one that is new to this survey. For the sake of
mation on their own and would need others and education comparability, this study focused on five of the financial
to help. literacy questions that have been used widely in the lit-
erature, in order to provide a general understanding of a
person’s financial literacy (Allgood & Walstad, 2016; Hast-
Method ings, Madrian, & Skimmyhorn, 2013; Lusardi & Mitchell,
Data 2014; Xiao & O’Neil, 2016). The questions test a respon-
The data set came from the 2015 NFCS, a nationally rep- dent’s knowledge of interest accrual, inflation, the rela-
resentative survey of people’s financial knowledge, atti- tionship between bond prices and interest rates, mortgages,
tudes, and behaviors that was commissioned by the Investor and the difference between stocks and stock mutual funds.
Education Foundation of the Financial Industry Regulatory All five questions assess general financial knowledge, the
Authority (FINRA, 2016). The survey was largely devel- bond question, being the most difficult (Lusardi & Mitchell,
oped from the 2012 to 2009 versions of the NFCS survey. 2014). See the FINRA (2016) report for information about
The 2015 NFCS survey was administered online to 27,564 the questions including wording and other variables of
adult respondents in the United States.
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interest.

134 Journal of Financial Counseling and Planning, Volume 30, Number 1, 2019
The questions are either multiple-choice or true–false style, Financial Education are the financial education course com-
giving the respondent the option to choose the correct binations that apply to each group. For example, the regres-
answer rather than coming up with the correct answer on sion for those with lower education included high school
their own. The financial literacy questions are simply a only, employer only, and a combination of high school and
proxy for evaluating people’s financial literacy, and there employer. The categories are all dummy variables equal to
are many topics that are not tested through the survey that 1 if the respondent reported receiving that combination of
may be covered through financial education. financial education. The dependent variable, Financial Lit-
eracy Score, are whole values between 0 and 5.
Each financial literacy question was coded as a 1 if the
respondent correctly answered the question. If the respon-
dent gave an incorrect response, the variable was coded as a Results
zero. If the respondent left it blank or said they did not know Descriptive Statistics
the answer, then it is assumed that they cannot answer the Table 1 reports the descriptive statistics for the 2015 sam-
question correctly. The financial literacy measure for this ple. For this study, people with more than a bachelor’s
article is the sum of correct responses with possible scores degree were eliminated in order to focus on subpopulations
ranging from 0 to 5. Higher scores indicate that the respon- that would have the most potential policy implications. Past
dent is more financially literate. research also focuses on people with less than a postgradu-
ate degree, indicating that research is limited regarding the
Other independent variables for the analysis include dummy effects of financial education on people with this level of
variables for gender, ethnicity, age group, education level, education. However, for the purpose of checking robust-
marital status, having at least one child, income group, and ness, those with postgraduate education were included and
employment status. These characteristics are used to control the results remained similar. The average financial literacy
for variations of people that may affect their financial lit- score was 2.74. The proportion of people that received each
eracy level. For example, previous research has found that financial education combination is also reported in Table 1.
those who are older, more educated, have higher income The combinations are distinct. People cannot fall into more
(which also includes being employed) is related to higher than one of the financial education combinations and there-
levels of financial literacy (Lusardi & Mitchell, 2014). Mar- fore the combinations sum to 100%. About 5% of the sam-
ital status and number of children can affect income and ple received financial education in high school only, about
therefore are also included as control variables. Finally, 4% of the sample received it in college only, and about 2%
there are dummy variables for the state the individual lives only received employer financial education. Two to three
in to control for geographical differences that previous percent of the sample received financial education from two
research has noted (Bumcrot, Lin, & Lusardi, 2013). sources. Finally, 3% of the sample received high school, col-
lege, and employer financial education. Almost 79% of the
Analytic Model sample received no financial education.
This study estimates the effects of financial education using
the following ordered probit model: The mean financial literacy score by course combination
split by education and income is shown in Table 2. Peo-
Fin.Lit.Score = 𝛽0 + 𝛽i X + 𝛽j Fin.Ed. + 𝛽k Z ple who reported having less than a high school degree or
a high school (or equivalent) degree were considered part
This model was used because the financial literacy score, of the lower education group. Income recording for the sur-
the dependent variable, is a discrete, noncontinuous vari- vey was done categorically, where a person could answer
able. The variable X is a vector of demographic charac- whether or not their income was less than $25,000, $25,000–
teristics including the person’s gender, ethnicity, marital 50,000, $50,000–75,000, $75,000–150,000, or greater than
status, employment, age, income, education, and children. $150,000. For this study, income was split at the median
The demographic characteristics are all dummy variables. —those who make less than $50,000 were considered low
The variable Z is a vector of state dummy variables to income while those who make more than $50,000 were
control for differences across states. The variables for
Pdf_Folio:135 considered high income. For the robustness check, other

Journal of Financial Counseling and Planning, Volume 30, Number 1, 2019 135
TABLE 1. Descriptive Statistics financial education. This is especially true for those who
Count M SD have lower education and incomes. Results in Table 2 also
Financial literacy score 23,817 2.7356 1.4643 show that people with higher education and incomes have
HS only 21,291 .0531 .2242 higher levels of financial literacy as indicated by answering
College only 21,291 .0449 .2070 more questions correctly (Lusardi et al., 2012; Lusardi &
Mitchell, 2014; Lyons et al., 2006; Monticone, 2010; Zhan
Employer only 21,291 .0223 .1476
et al., 2006).
HS and college only 21,291 .0274 .1633
HS and employer only 21,291 .0181 .1332
College and employer Only 21,291 .0201 .1402 Financial Education and Financial Literacy
HS, college, and employer 21,291 .0288 .1672 In order to maintain simplicity, only the financial education
No Fin. Lit. 21,291 .7854 .4106 results are presented in Tables 3 and 4. All the results are
compared to people with no financial education. Financial
Male 23,817 .4773 .4995
education is correlated to financial literacy. Those who had
White 23,817 .6503 .4769
financial education were less likely to have lower financial
25–34 23,817 .1758 .3807
literacy scores and more likely to have high financial lit-
35–44 23,817 .1579 .3647
eracy scores. The ordered probit predicted probabilities for
45–54 23,817 .1813 .3853 people with lower education, are shown in Panel A in Table
55–64 23,817 .1748 .3798 3. Receiving a high school, employer, or both, decreased the
65+ 23,817 .1732 .3785 probability of answering 0, 1, and 2 questions correctly by
Less than high school 23,817 .0288 .1674 2%–7% points, compared to people who did not have any
High school 23,817 .2957 .4564 financial education. The financial education combinations,
Some college 23,817 .3494 .4768 however, increased the likelihood of answering 3, 4, and 5
College—Associates or bachelors 23,817 .3261 .4688 financial literacy questions correctly by 2%–8% points.
Married 23,817 .5059 .5000
Single 23,817 .3271 .4692 Ordered probit results for people with higher education lev-
Divorced/separated 23,817 .1231 .3285 els are shown in Panel B in Table 3. Having financial edu-
cation decreased the probability of answering 0, 1, 2, and
Widowed/widower 23,817 .0439 .2048
3 questions by 1%–6% points. People with higher educa-
Has children 23,817 .3563 .4789
tion levels, who received financial education, were 2%–5 %
Less than $25k 23,817 .2689 .4434
points more likely to answer 4 questions correctly and
$25–50k 23,817 .2798 .4489
3%–9% points more likely to answer 5 questions correctly.
$50–75k 23,817 .2003 .4003
$75–150k 23,817 .2138 .4100 These results are as expected—people with lower and higher
$150k+ 23,817 .0372 .1891 education levels were more likely to have higher finan-
Self employed 23,817 .0699 .2551 cial literacy scores if they received financial education from
Employed 23,817 .4564 .4981 one or more sources. This suggests that there is a positive
Not in labor force 23,817 .2062 .4046 correlation with financial education and increased finan-
Unemployed 23,817 .0705 .2560 cial literacy as measure by answering more financial lit-
Retired 23,817 .1970 .3977 eracy questions correctly. Another noteworthy result, from
Observations 23,817 Table 3, is that in many cases, financial education is more
related to financial literacy for people with lower education
Note. HS = high school.
levels—the predicted probabilities are larger than the cor-
income differentiation points were estimated and results responding classes for people with higher education levels.
remained similar. The general population, who received For example, in Panel A those who took a high school course
any of the financial education combinations, answered were almost 7% points more likely to answer four questions
statistically more questions than those who did not take any correctly compared to those with higher education in panel
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136 Journal of Financial Counseling and Planning, Volume 30, Number 1, 2019
TABLE 2. Mean Financial Literacy Scores by Course
Course No Course
Type of Course n M n M Total n Significance
Low education (Less than HS or HS Degree)
***
HS only 505 2.5475 5,315 2.2785 5,820
***
Employer only 91 2.9333 5,315 2.2785 5,406
***
HS and employer 145 2.6631 5,315 2.2785 5,460
High education (some college or college degree)
HS only 563 3.0184 11,195 2.9392 11,758
College only 1,055 2.9664 11,195 2.9392 12,250
***
Employer only 409 3.5097 11,195 2.9392 11,604
***
HS and college 668 3.2530 11,195 2.9392 11,863
**
HS and employer 219 3.1599 11,195 2.9392 11,414
***
College and employer 472 3.5818 11,195 2.9392 11,667
***
HS, college, employer 654 3.3477 11,195 2.9392 11,849
Low income (<$50,000)
***
HS only 665 2.5843 8,839 2.3739 9,504
***
College only 567 2.6993 8,839 2.3739 9,406
***
Employer only 166 2.9439 8,839 2.3739 9,005
***
HS and college 324 2.9907 8,839 2.3739 9,163
*
HS and employer 144 2.5523 8,839 2.3739 8,983
***
College and employer 133 3.0041 8,839 2.3739 8,972
***
HS, college, employer 216 3.0393 8,839 2.3739 9,055
High income (>$50,000)
HS only 403 3.0733 7,671 3.1095 8,074
**
College only 488 3.3093 7,671 3.1095 8,159
***
Employer only 334 3.6041 7,671 3.1095 8,005
***
HS and college 344 3.5329 7,671 3.1095 8,015
HS and employer 220 3.2097 7,671 3.1095 7,891
***
College and employer 339 3.8567 7,671 3.1095 8,010
***
HS, college, employer 438 3.5175 7,671 3.1095 8,109
Note. HS = high school.
*
p < .1. ** p < .05. *** p < .01.

B who are 3% points more likely to answer four questions financial education. People who received financial educa-
correctly. This result suggests that financial literacy is pos- tion were 1%–7% points more likely to answer 3, 4, and 5
itively associated with financial education but more so for questions correctly. Therefore, people who received finan-
people with lower education levels. cial education were more likely to have higher financial lit-
eracy scores and less likely to have lower financial literacy
Table 4 shows the ordered probit predicted probabilities scores.
by income groups. Results for people with low income
are shown in Panel A. People who received any financial The ordered probit results for people with higher income are
education courses were 2%–6% points less likely to answer shown in Panel B in Table 4. People with higher incomes
0, 1, or 2 questions correctly compared to people with no were less likely to answer 0, 1, 2, or 3 questions correctly
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Journal of Financial Counseling and Planning, Volume 30, Number 1, 2019 137
TABLE 3. Ordered Probit Predicted Probabilities Split by Education (Omitted Category: No Financial
Education Course)
0 Correct 1 Correct 2 Correct 3 Correct 4 Correct 5 Correct
Panel A: Low education
HS only -0.0494*** -0.0590*** -0.0348*** 0.0331*** 0.0675*** 0.0427***
(0.006) (0.009) (0.007) (0.003) (0.010) (0.008)
Employer only -0.0522** -0.0658**** -0.0430** 0.0325*** 0.0765*** 0.0519**
(0.014) (0.023) (0.021) (0.005) (0.028) (0.026)
***
HS and employer only -0.0339 -0.0388*** -0.0209** 0.0238*** 0.0438*** 0.0261**
(0.011) (0.014) (0.010) (0.007) (0.017) (0.011)
Pseudo R2 .0547 .0547 .0547 .0547 .0547 .0547
Observations 6,056 6,056 6,056 6,056 6,056 6,056
Panel B: High education
HS only -0.0132*** -0.0250*** -0.0308*** -0.0103*** 0.0327*** 0.0466***
(0.003) (0.006) (0.008) (0.004) (0.008) (0.014)
***
College only -0.0120 -0.0223*** -0.0270*** -0.0084*** 0.0293*** 0.0403***
(0.002) (0.005) (0.006) (0.003) (0.006) (0.010)
***
Employer only -0.0185 -0.0367** -0.0479*** -0.0198*** 0.0469*** 0.0760***
(0.003) (0.007) (0.010) (0.006) (0.008) (0.019)
***
HS and college only -0.0188 -0.0371*** -0.0483*** -0.0197*** 0.0476*** 0.0765***
(0.002) (0.005) (0.007) (0.005) (0.006) (0.013)
HS and employer only -0.0039 -0.0069 -0.0079 -0.0018 0.0091 0.0113
(0.006) (0.011) (0.013) (0.003) (0.014) (0.019)
***
College and employer only -0.0207 -0.0418*** -0.0559*** -0.0250*** 0.0528*** 0.0907***
(0.002) (0.006) (0.009) (0.006) (0.006) (0.017)
***
HS, college, and employer -0.0155 -0.0296*** -0.0373*** -0.0135*** 0.0386*** 0.0573***
(0.003) (0.006) (0.008) (0.004) (0.007) (0.014)
2
Pseudo R .0703 .0703 .0703 .0703 .0703 .0703
Observations 15,235 15,235 15,235 15,235 15,235 15,235
Note. Standard errors in parentheses.
**
p < .05. *** p < .01.

by 1%–6% points. People with financial education were questions correctly. Financial education has a larger posi-
1%–2% points and 2%–11% points more likely to answer 4 tive correlation with financial literacy for people who have
and 5 financial literacy questions correctly. lower income. The findings from Tables 3 and 4 strengthen
the argument and previous research, indicating that finan-
According to the ordered probit results by education groups, cial education is highly correlated with financial literacy,
the predicted probabilities are larger for people with lower especially for people who have lower financial literacy
income than for higher income in all cases except in the scores and may need financial education the most (Lusardi,
last column, which predicted 5 as being correct. Compar- 2003).
ing Panel A and B in Table 4, people with lower income
who received financial education in high school were 6% As an extension and robustness check, each question was
points more likely to answer 4 questions correctly while estimated to examine how financial education affects each
those with higher income who received financial education financial literacy question separately. The five questions
in high school were 3% points more likely to answer four
Pdf_Folio:138
that comprise the financial literacy score cover a range

138 Journal of Financial Counseling and Planning, Volume 30, Number 1, 2019
TABLE 4. Ordered Probit Predicted Probabilities Split by Income (Omitted Category: No Financial
Education Course)
0 Correct 1 Correct 2 Correct 3 Correct 4 Correct 5 Correct
Panel A: Low income
HS only -0.0401*** -0.0516*** -0.0357*** 0.0195*** 0.0643*** 0.0436***
(0.005) (0.008) (0.007) (0.002) (0.010) (0.008)
College only -0.0242*** -0.0291*** -0.0179*** 0.0136*** 0.0356*** 0.0219***
(0.006) (0.008) (0.006) (0.003) (0.011) (0.007)
*** *** ** ***
Employer only -0.0380 -0.0495 -0.0349 0.0181 0.0618*** 0.0425**
(0.010) (0.015) (0.014) (0.002) (0.020) (0.017)
HS and college only -0.0415*** -0.0549*** -0.0395*** 0.0189*** 0.0687** 0.0483****
(0.006) (0.009) (0.009) (0.001) (0.012) (0.011)
** * ***
HS and employer only -0.0231 -0.0279 -0.0173 0.0130 0.0342* 0.0212*
(0.011) (0.014) (0.011) (0.005) (0.018) (0.013)
College and employer only -0.0349*** -0.0448*** -0.0307** 0.0173*** 0.0557*** 0.0374**
(0.010) (0.016) (0.014) (0.003) (0.021) (0.017)
HS, college, and employer -0.0414*** -0.0549*** -0.0397*** 0.0187*** 0.0687*** 0.0485***
(0.008) (0.013) (0.012) (0.001) (0.017) (0.015)
Pseudo R2 .0522 .0522 .0522 .0522 .0522 .0522
Observations 11,054 11,054 11,054 11,054 11,054 11,054
Panel B: High income
HS only -0.0114*** -0.0250*** -0.0386*** -0.0211*** 0.0304*** 0.0656***
(0.002) (0.005) (0.009) (0.007) (0.006) (0.018)
College only -0.0084*** -0.0179*** -0.0266*** -0.0133** 0.0224*** 0.0439***
(0.003) (0.006) (0.010) (0.006) (0.007) (0.017)
Employer only -0.0154*** -0.0357*** -0.0582*** -0.0366*** 0.0403*** 0.1056***
(0.002) (0.006) (0.012) (0.010) (0.005) (0.026)
HS and college only -0.0129*** -0.0290*** -0.0459*** -0.0267*** 0.0344*** 0.0801***
(0.003) (0.006) (0.011) (0.009) (0.006) (0.022)
HS and employer only -0.0061 -0.0128 -0.0187 -0.0088 0.0162 0.0302
(0.004) (0.008) (0.013) (0.007) (0.010) (0.022)
College and employer only -0.0160*** -0.0372*** -0.0613*** -0.0394*** 0.0414*** 0.1124***
(0.002) (0.006) (0.011) (0.010) (0.004) (0.023)
HS, college, and employer -0.0089*** -0.0192*** -0.0288*** -0.0147** 0.0239*** 0.0477**
(0.003) (0.006) (0.011) (0.007) (0.007) (0.019)
Pseudo R2 .0725 .0725 .0725 .0725 .0725 .0725
Observations 10,237 10,237 10,237 10,237 10,237 10,237
Note. Standard errors in parentheses.
*
p < .1. ** p < .05. *** p < .01.

of topics and vary in difficulty. Financial education was financial education is positively related to financial liter-
positively related to each of the financial literacy ques- acy scores for different subgroups of the population and dif-
tions—those who took any financial education were more ferent financial literacy topics. As an additional robustness
likely to have higher financial literacy scores as measured check, these results were compared against the 2012 sur-
by the number of questions answered correctly. Therefore
Pdf_Folio:139

vey. Results remain similar and robust when splitting the

Journal of Financial Counseling and Planning, Volume 30, Number 1, 2019 139
sample by education and income (results are not shown but which may have biased the results. As discussed, it is not
available upon request). clear exactly why a person received financial education.
While these questions are beyond the scope of this study,
Discussion they are important to study in the future to aid in the develop-
Results suggest that financial education is positively related ment and analysis of financial education programs. Finally,
to financial literacy scores regardless of how the sample was future research in this area should focus on the causal effects
split. This result can be seen throughout the mean finan- of financial education —does financial education improve
cial literacy scores. People who received financial education financial decisions and outcomes for those who took it?
had statistically higher financial literacy scores compared
to those who did not receive any financial education. Despite the limitations of this study, financial education
Results from the ordered probit model show that people who appears to be positively related to higher levels of finan-
received financial education tended to have higher financial cial literacy especially for those with lower education and
literacy scores compared to people with no financial edu- income levels. While this study does not show a causal rela-
cation which is consistent with previous research (Lusardi tionship, it does suggest that there is a correlation between
& Mitchell, 2014; Xiao & O’Neill, 2016). When comparing taking any type of financial education and subsequent finan-
predicted probabilities for people with lower education and cial literacy as measured by five financial literacy questions.
income to those with higher education and income, financial This research will aid those developing financial education
education had a larger positive correlation, as seen by larger programs as results suggest that financial education in high
coefficients, on sub groups of the population that research school, college, through an employer, or any combination of
suggests may need more financial education. the three, is correlated with higher financial literacy scores
even years after taking the course. This research also empha-
There are some general limitations in this research. First, sizes a need to teach financial education to those who have
there is no information about the content or length of the lower education and income levels—people whom previous
financial education. For this study, all high school, college, research suggests lacks financial literacy and may need the
and employer financial education are assumed to be com- most help.
parable. However, they may have different lengths of time
(a day, week, or an entire year) and also have a wide variety
in the depth regarding the content that is covered. Another References
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