A financial literacy study is essential for program evaluation, determining which methods effectively change behavior and which methods do not. A financial literacy study often reviews years of data from financial education programs and uses statistical tests to determine their efficacy. These studies are also instrumental in raising awareness for the lack of financial literacy among individuals, the consequences of such illiteracy, and the well-researched benefits properly designed financial literacy programs can have on the financial well-being of individuals.
Starting in 2000, the states of Georgia, Idaho, and Texas began mandating financial education. The improvement in credit scores after program completion for each of these states was compared against the improvement in credit scores to a nearby state without state-mandated financial education. The credit scores were recorded on a 280-850 scale. For students participating in the programs’ 3rd year of implementation, credit scores increased by 10.89 in Georgia, 16.19 in Idaho, and 31.71 in Texas. http://www.finra.org
One team of researchers decided to analyze the efficacy of simulations in producing behavioral change in students. Students who took Junior Achievement’s Finance park, a simulation for middle school students in which students assume family and income scenarios, were split up into two groups after going through the park the first time. One group underwent financial education training while the other group did not. After 12 weeks, all the students went through the park for a second time. Over half the students in the group that received training were able to successfully construct a budget, a statistically significant amount over the single student who was able to do so before the training. http://www.nber.org/papers/w16271.pdf
Households that scored higher on a specially constructed investment knowledge index were found to be more likely to have a diversified portfolio and have a 401(k) account. https://www.federalreserve.gov/pubs/bulletin/2003/0703lead.pdf
At a time when it seems like STEM is getting most public funding, financial literacy statistics can help make the case for financial education programs in the eyes of educators and attract public funding for these programs, too. A financial literacy study can be conducted by those in academia or mature financial education programs that would like to share best practices with other initiatives. Without financial literacy studies, it would be difficult for financial literacy programs to ascertain the effectiveness of different methods.