American Economic Review: Vol. 101 No. 3 (May 2011)


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The Financial Education Fallacy

Article Citation

Willis, Lauren E. 2011. "The Financial Education Fallacy." American Economic Review, 101(3): 429-34.

DOI: 10.1257/aer.101.3.429


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.

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Willis, Lauren E. (Loyola Law School, Los Angeles)

JEL Classifications

D14: Personal Finance
D83: Search; Learning; Information and Knowledge; Communication; Belief

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