The Causal Mechanism of Financial Education : Evidence from Mediation Analysis
This paper uses a field experiment in India with multiple financial education treatments to investigate the causal mechanisms between financial education and financial behavior. Focusing on the mediating role of financial literacy, the paper propos...
| Main Authors: | , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/472901540223638588/The-Causal-Mechanism-of-Financial-Education-Evidence-from-Mediation-Analysis http://hdl.handle.net/10986/30601 |
| Summary: | This paper uses a field experiment in
India with multiple financial education treatments to
investigate the causal mechanisms between financial
education and financial behavior. Focusing on the mediating
role of financial literacy, the paper proposes a broader
definition of financial knowledge that includes three
dimensions: numeracy skills, financial awareness, and
attitudes toward personal finance. The analysis then employs
causal mediation analysis to investigate the proportion of
the treatment effect that can be attributed to these three
channels. Strikingly, numeracy does not mediate any effects
of financial education on household outcomes. For simple
financial actions such as budgeting, both awareness and
attitudes serve as critical pathways, while for more complex
financial activities such as opening a savings account,
attitudes play a more prominent role. These findings
underscore the importance of changing perceptions about
financial products and services as a vital mechanism for the
success of financial education. |
|---|