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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
The State of Financial Capability
J. Michael Collins
University of Wisconsin-Madison
2013
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Recent Studies Summarize MixedEvidence
Who participates and why? Who does not?Comparison group is a big challenge
Time for program and time for impacts to take effectsNeed reliable and valid measures
Effects of a single program in isolation tend to be small
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Field Experiment
GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Learning Persists
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Banks in School Boost Child Bank Use
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
State Education Experiments in 2007
State Length TestingGeorgia 1yr YesIdaho 0.5 yr NoTexas 1yr Yes
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Credit Outcomes for 18-22 Year OIdsGraduating After New Mandate: GA
Credit Score 30 Day Late1 year 4.6 -0.1%2 years 6.8 -1.5%3 years 7.0 -3.5%
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Financial Counseling for Adults in PublicPrograms
Percent of Debt Past Due
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Re-Frame: Understanding Decisions inContext
Everyone’s Goal = financial security
Choices = tradeoffsSavings may not be goal; paying bills, debts, paying for‘needs’
e.g. Emergency savings = cash in pinch or spending on‘social mobility’
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Payday Loans
GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Compared to What?
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
More Information Can Encourage Debt Use
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
But Not Worse Debt Use?
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Financial Capability Model
Experience
Skills
Behavior
Knowledge
Program Personality
Attitude
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Fin Tech and Mobile Financial Services
Accelerated use oftechnologyPrepaid debit cardsElectronic paymentsSmartPhone WalletInstant liquidity
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Aging: Loss in Cognitive Functioning
Ability to make financial decisions?
30% of people in their 80s show cognitive impairment20% of people in 80s show evidence of dementia
That’s 50%. 50-50 chance you will lose cognitive acumen.
Agarwal, Driscoll, Gabaix, and Laibson. 2009. Brookings Papers on Economic Activity 2:51-117.http://dash.harvard.edu/handle/1/4554335
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GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Emerging Strategies / Innovations
Peers (and networks), Couples, Inter-Generational
Focus on Goals and Intentions
Attention and Reminders
Financial Coaching
Emergency Savings
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Recognize Limitations
Important to Watch Progress
GovernorsCouncil onFinancialLiteracy
Studies ofStudies onFinancialEducation &Counseling
School-basedFinancialEducation
Counseling
FinancialCapability
LookingAhead
Contact
J. Michael CollinsCenter for Financial Securityjmcollins @ wisc.edu608.616.0369
cfs.wisc.edussc.wisc.edu/~jmcollin/
Twitter: @jmcollinswisc
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