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Real-World Impacts of Financial Literacy

Paper Session

Friday, Jan. 4, 2019 12:30 PM - 2:15 PM

Atlanta Marriott Marquis, M202
Hosted By: National Association of Economic Educators
  • Chair: Carlos Asarta, University of Delaware

Improving Financial Literacy of the Poor and Vulnerable in Indonesia: An Empirical Analysis

Dwi Sulistyorini Amidjono
University of Indonesia and Indonesian Council for Economic and Financial Literacy (ICEFE)
Paul Grimes
Pittsburg State University and Global Economic Education Alliance
Jane Lopus
California State University-East Bay and Global Economic Education Alliance


As part of an Inclusive Workforce Development project sponsored by USAID/Indonesia, we describe outcomes of a training-of-trainers program in financial literacy and soft skills designed to improve employability of poor and vulnerable Indonesians aged 18 – 34. Twenty-five teachers received training in Jakarta in December 2017, and subsequently conducted three-day trainings for 601 students in West Java in early 2018. The primary treatment group consisted of students enrolled in vocational programs offered by local public and private agencies and post-secondary polytechnic institutions. The level of education varied widely for both teacher-trainers and students.
Initial teacher training occurred during a week-long workshop covering both personal finance and personal soft skills topics. The financial literacy curriculum was developed and taught by three economists specializing in economic education, while the soft skills curriculum was adapted and overseen by professionals from the International Youth Foundation, an economic development consultancy.
The teacher-trainers then taught the curriculum over a three day period at their home institutions. In addition to basic demographic information, all participating teachers and students were assessed on changes in financial literacy knowledge, on changes in self-perceptions about the acquisition of soft skills, on attitudes and behavior relating to financial literacy, and on the relevance and quality of the training. Our findings indicate that the program resulted in statistically significant increases in financial literacy knowledge for both the trainers and the students, and that there was widespread satisfaction with the program. Student perceptions about their acquisition of soft skills increased significantly as well.
Student financial literacy knowledge increases were found to relate to prior knowledge, work experience, the type of school they attend, the perceived acquisition of soft skills, and the intention to incorporate the training into their daily lives. Because previous literature links financial literacy to improved worker productivity, decreased absenteeism, and entrepreneurial success, these findings are encouraging both for the students involved and for their workplaces in Indonesia.

The Effect of Financial Literacy on Withdrawing Funds Intended for Retirement—Conclusions Drawn from Three Years of Data

Ashley Ann Tharayil
Austin College
William B. Walstad
University of Nebraska-Lincoln


Although there have been numerous studies investigating the effects of financial literacy on saving and planning for retirement, few studies have tried to see if financial literacy plays a role in keeping money intended for retirement in retirement accounts, prior to retirement. The intent of this paper is to add to the body of literature examining the effects of financial literacy on dissaving from retirement accounts. This paper analyzes three years of data from a nationally representative data set. Results from the study consistently show that barring few exceptions, individuals who are more financially literate are significantly less likely than individuals with low financial literacy to withdraw money intended for retirement, pre-retirement. These results hold even after controlling for extraneous “shock” variables and, various socio-economic and demographic variables.

Persistence of the Racial Financial Literacy Gap. Can Parental and Formal Financial Education Bridge the Gap?

Abdullah Al-Bahrani
Northern Kentucky University
Jamie Weathers
Western Michigan University


Racial differences in returns to financial literacy education are dependent on the source of respective education. Using the National Financial Capability Study (NFCS) data we identify five education sources: parental, high school, college, employer, and military. Our results indicate that the financial literacy scores for minorities are 9-16 percentage points lower than whites. Formal financial literacy education increases financial literacy scores between 3-6.1 percentage points. College level financial literacy education exhibits higher returns for whites than minorities. Receiving financial education from parents increases financial literacy scores by 1.7 percentage points, however, the returns to parental education depreciate as minorities age, whereas they persist for whites.
Brooke Conaway
Georgia College
Paul Grimes
Pittsburg State University
Andrew Hill
Federal Reserve Bank of Philadelphia
JEL Classifications
  • A2 - Economic Education and Teaching of Economics