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

Abstract

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 rates of behavior. The current paper 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 non-highly 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.

Learning by doing: the role of financial experience in financial literacy

“…A survey of the literature by Braunstein and Welch (2002) concludes that programmes that take a specific goal-orientated approach to financial education, such as those aimed towards improving home ownership , improving workplace retirement scheme participation (Bayer et al 1996;Lusardi and Mitchell 2009) or offering credit counselling (Elliehausen et al 2003) have a positive effect on financial behaviour. However, other studies find that similar goal-orientated programmes like retirement seminars are ineffective in changing financial behaviour (Madrian and Shea 2001;Duflo and Saez 2003;Choi et al 2006).…”

Impact of Older-Worker-Friendly Organizational Policies on Retirement Attitudes and Planning

“…As many of the AARP Best Employers have a high number of workers over 50, it is likely that these employers have a high average age for their workers. One study found that individuals who participate in organizationally sponsored retirement seminars more often participate in voluntary savings programs and have higher contributions to those savings programs (Bayer, Bernheim, & Scholz, 2009), indicating that when organizations educate their workers on the benefits of saving for retirement, workers often listen.…”

Saving for Retirement—A Case for Financial Education in Germany and UK? An Economic Perspective

“…One branch of the US literature has focused on the behavioural effects of education related to retirement provision in the workplace (Bayer et al 1996;Bernheim and Garrett 2003;Lusardi 2004), while others have studied the effect of including financial education in the high school curricula on saving when reaching adulthood (Bernheim et al 1997). These studies have generally identified significant effects of financial training on specific goals such as saving while the acquisition of a more general and more comprehensive financial literacy is less clear cut (Braunstein and Welch 2002, p. 452).…”