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Does education improve financial behaviors? Quasi-experimental evidence from Britain

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  • Gray, Daniel
  • Montagnoli, Alberto
  • Moro, Mirko

Abstract

This paper uses a range of exogenous schooling reforms in the UK to explore the relationship between education and a range of financial behaviours. Initially, we exploit two compulsory schooling reforms in Britain (1947 and 1972) and employ a regression discontinuity design to analyse nationally representative data. We find limited evidence that one extra year of schooling led to systematically different financial behaviours. One exception is the promotion of more positive saving behaviours amongst females affected by the 1947 reform. We then go on to explore a large expansion of the higher education sector in the UK, which occurred during the 1980s and 1990s, and confirm that general education does not appear to affect financial behaviours systematically. We argue that, despite clear positive spill-overs of educational reforms, desirable financial behaviours require specific and targeted education policies and we point to the growing research in this field to support this conclusion.

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  • Gray, Daniel & Montagnoli, Alberto & Moro, Mirko, 2021. "Does education improve financial behaviors? Quasi-experimental evidence from Britain," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 481-507.
    • Handle: RePEc:eee:jeborg:v:183:y:2021:i:c:p:481-507
    DOI: 10.1016/j.jebo.2021.01.002
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    More about this item

    Keywords

    Compulsory schooling laws; Education expansion; Financial behaviours; Regression discontinuity; Saving decisions;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I20 - Health, Education, and Welfare - - Education - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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