The Financial Education Fallacy

Author: Willis Lauren E.  

Publisher: American Economic Association

ISSN: 0002-8282

Source: The American Economic Review, Vol.101, Iss.3, 2011-05, pp. : 429-434

Disclaimer: Any content in publications that violate the sovereignty, the constitution or regulations of the PRC is not accepted or approved by CNPIEC.

Previous Menu Next

Abstract

Research to date does not demonstrate a causal chain from financial education to welfare-enhancing financial behavior, in part due to biases, heuristics, and emotional influences on decisions. Yet the search for effective financial education continues. But it is time to ask whether giving every person effective financial education would make us better off. Two reasons it might not are discussed here. First, the time, expense, and invasion of privacy required would be enormous. Second, such a world would entail a decrease in individual autonomy. Alternative tools could potentially increase household financial welfare and security at lower social and individual expense.