The Effectiveness of an Intervention on Child Financial Literacy

Background:

A strong foundation of financial literacy, such as one’s ability to process economic information for decision making, are important to support various life goals (e.g., education, retirement, debt responsibility). The lack of sufficient financial literacy can lead to a number of pitfalls, such as being more likely to accumulate unsustainable debt burdens, either through poor spending decisions or a lack of long-term preparation. In modern society, child and youth are growing in a society featured by the complexity in financial activities and decisions. Due to nature in differences between adult and children, such as real experiencing in dealing with financial issues and financial tasks and responsibilities, effective strategies for adults should not be simply applied to children (McCormick, 2009). The study examines the effectiveness of a school-based intervention on child financial literacy.

Method:

The data are from the evaluation of a school-based financial education program targeting students of the fourth grade from less-developed regions of China. The game-based child financial education program was operated for a full academic year by a social service agency in China. Adopted a quasi-experimental design, the evaluation first randomly drew 586 students from the schools where the program was implemented to be the treatment group. Schools where the program was not implemented, and nearby the drawn schools were invited to join the evaluation. From these schools, 551 students were randomly drawn to be the treatment group. Financial literacy was assessed at the baseline, the mid-point of the intervention (after one semester), and the endpoint. Demographic information of the students was also collected.

Results and Discussion:

Mixed effect models reported that the financial literacy of the treatment group was significantly higher at the mid-point. The effect was strengthened at the end point. Understanding interest, understanding inflation, and understanding the function of insurance were the three particular aspects which were significantly improved by the intervention, though the effect on the latter two aspects did not show until the end point. In sum, the school-based intervention is effective on improving the financial literacy of children from less-developed regions of China. The effect is not uniform across different aspects of financial literacy.