We wrote previously about the dangers of promoting financial literacy efforts INSTEAD of regulating abusive credit products and INSTEAD of providing relief for financially distressed student loan borrowers. We noted the shocking lack of evidence that financial literacy is effective.
A recent report by the U.S. Government Accountability Office acknowledges that “we still know little about the effectiveness of these [financial literacy] efforts.” The GAO cites evidence that many consumers could benefit from increased financial knowledge. This is not a surprise, especially given the complexity of the consumer credit marketplace. The key question is whether the smorgasbord of financial literacy programs result in more informed consumer decisionmaking.
The GAO acknowledges that there are few evaluations of financial literacy programs that use empirical evidence and even fewer that measure impact on behavior. The GAO basically throws up its hands and concludes that it cannot generalize or make conclusions about exactly which methods and strategies are most effective.
In the absence of empirical studies, the GAO cited experts and practitioners presenting ideas based on their experiences and anecdotal evidence. They concluded that the following elements are considered desirable for successful financial literacy programs:
1. Content that is relevant and timely,
2. Appropriate delivery methods for the audience or topic,
3. Accessibility and cultural sensitivity,
4. Use of partnerships, and
5. Program Evaluation.
It is hard to argue with these conclusions, but again, it is also hard to pour a lot of money into these efforts until we have a better sense of the impact on consumer decision making.