Consumer Agency Seeks to Break the Logjam in Financial Education

In a report, the Consumer Financial Protection Bureau calls for rigorous data collection to prove what works in financial education

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The fight for financial education at work or in school has reached a troubling impasse: There is little conclusive evidence that personal finance instruction changes behavior, and without such evidence doubts about these programs linger and the larger effort loses steam.

The Consumer Financial Protection Bureau is trying to break this logjam. In a report, the watchdog agency sets forth guidelines for gathering scientifically rigorous data that it believes will help squash the doubts. This would allow us to move forward as a nation along with dozens of other countries that have made raising the financial I.Q. of their citizens a priority. The report summarizes the impasse this way:

There exists something of a chicken-and-egg problem: Programs need funding to set up data collection systems, but have trouble fundraising without data-driven evidence of their program’s impact.

The CFPB is calling upon “service providers, financial institutions, policy makers, and funders” in the area of financial education to build “a growing body of rigorous evidence of what works.” The agency’s office of financial education will then use the data to broadly proscribe programs and strategies with a proven track record. The immediate goals are to:

  • Determine how to measure financial well-being.
  • Identify the skills and habits of money smart consumers.
  • Evaluate existing programs and determine how to improve them.

The report is important for anyone in the field and hoping to help shape the financial education movement. It offers thoughts on how to design and conduct a study that will interest researchers at the CFPB. If you’re not in the field, the report won’t mean much to you—except, maybe, that we’re beginning to tackle the core impediments to broadening the financial education movement, and looking in earnest for a way to answer the movement’s critics so that we can move forward.