The Effects of Financial Education in the Workplace: Evidence from a Survey of Employers

By John Karl Scholz. 2009

382 citations recorded by the source corpus.

We examine the effects of education on financial decision-making skills by identifying an interesting source of variation in pertinent training. During the 1990s, an increasing number of individuals were exposed to programs of financial education provided by their employers. If, as some have argued, low saving frequently results from a failure to appreciate economic vulnerabilities, then education of this form could prove to have a powerful effect on behavior. The current article undertakes an analysis of these programs using a previously unexploited survey of employers. We find that both participation in and contributions to voluntary savings plans are significantly higher when employers offer retirement seminars. The effect is typically much stronger for nonhighly compensated employees than for highly compensated employees. The frequency of seminars emerges as a particularly important correlate of behavior. We are unable to detect any effects of written materials, such as newsletters and summary plan descriptions, regardless of frequency. We also present evidence on other determinants of plan activity.

Subfields: Accounting, Demography, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/bc16f45b2a7e7e02ea3e33f598bc849694d857e5

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Citations in the corpus

How Am I Doing? Perceived Financial Well-Being, Its Potential Antecedents, and Its Relation to Overall Well-Being (2018, neutral): “…financial well-being with financial behavior (Allgood and Walstad 2016) and assume its presence from financial knowledge, financial product ownership, or participation in company financial plans (Bayer, Bernheim, and Scholz 2009; Gerardi, Goette, and Meier 2010; Hung, Parker, and Yoong 2009).”
How Does Household Portfolio Diversification Vary with Financial Literacy and Financial Advice (2011, positive): “The output measure has most often been undersaving (Bayer et al., 2009; Cole and Shastry, 2009; Hilgert et al., 2003; Lusardi and Mitchell, 2007a,b), although recent applications include stock market participation (van Rooij et al., forthcoming), overindebtedness (Lusardi and Tufano, 2009), and…”
Financial Literacy and Emergency Saving (2014, positive): “For example, several noteworthy studies of financial education reported positive effects of programs on saving account ownership and/or contributions among populations of employees (Bayer et al. 2009), individuals who were previously reported for bank account abuse or mismanagement (Haynes-Bordas et”
Handbook of Consumer Finance Research (2008, neutral): “Moreover, workshops and seminars offered to employees have been linked to improved fi nancial knowledge and behaviors (Bayer et al., 2008 ; Bernheim & Garrett, 2003 ; Kim & Garman, 2003 ; Kim, 2007 ; Hira & Loibl; 2005 ; Prawitz & Cohart, 2014 ).”
The effects of financial education in the workplace: evidence from a survey of households (2003, positive): “Bayer et al. (1996) find that, controlling for other factors, the use of seminars, summary plan descriptions, newsletters, and periodicals among 401(k) plan sponsors is not significantly related to whether the plan covers union employees.”