The Effectiveness of a Formal Financial Education Program at Primary Schools and the Role of Informal Financial Education

Abstract

Objectives: This study examines the effectiveness of a formal financial education program for improving the financial literacy of primary school children and how this effectiveness is influenced by informal financial education provided by parents, such as giving pocket money and discussing money matters. Method: A quasi field experiment was carried out at the Museum of Saving in Turin where children participated in a financial education program (the treatment). The first two out of three classes that arrived at the museum were assigned to the treatment group and the third one to the comparison group. Difference-in-differences models are estimated using financial literacy data from a pretest taken about 1 week before the visit to the museum and a posttest taken on the day of the visit; just before starting with the program at the museum for the comparison group and just after program completion for the treatment group. Results: In line with previous studies, we find that our formal financial education program had a positive effect on the financial literacy of primary school children. The empirical findings provide weak evidence that this effect of formal financial education is stronger for children who received informal financial education from their parents. Conclusions: Our study contributes to the previous literature by presenting further evidence that a short extra-curricular course can be effective in increasing economic and financial literacy among students. Furthermore, we present suggestive evidence—worth of further research—that informal financial education can reinforce the effect of formal financial education. JEL Codes: A29, C93, G40.