The ABCs of financial education: Experimental evidence on attitudes, behaviour, and cognitive biases

Fenella Carpena, Shawn Cole, Jeremy Shapiro and Bilal Zia


How do financial education interventions facilitate informed economic decision-making? This paper argues that while financial education improves financial awareness and attitudes, it fails to improve longer term behavioural outcomes on savings and borrowing.  It focuses on what may prevent recipients from benefitting from financial education if not addressed within the programme. The findings suggest a more personalised model of financial education are more successful in helping individuals circumvent behavioural and cognitive constraints.

The study used a randomised evaluation with a large study sample of over 1,300 individuals in Ahemdabad, India. The study complemented financial education with (i) participant classroom motivation with pay for performance on a knowledge test, (ii) intensity of treatment with personalised financial counselling, and (iii) behavioural nudges with financial goal setting.

Survey data indicates a positive correlation between financial education and better financial decisions, but causal analysis remains scarce. Of those that do exist, the impact of financial education on ultimate financial outcomes is unclear. Findings corroborate those from the wider literature which finds that financial education alone does not achieve positive impact on financial outcomes.

Traditional financial education programs, especially those implemented in a group setting with a one-size-fits-all approach, may be inadequate in equipping individuals with the appropriate tools to bridge the gap between financial knowledge and financial behaviour:

  • Lack of motivation is found not to be a factor suggesting individuals face multiple other constraints in improving financial behaviour.
  • Behavioural factors such as procrastination and forgetfulness play a role in participants translating financial training into action.
  • Intensity and personalisation of financial education support, such as individualised counselling, can enable individuals to undertake more costly or difficult actions to better manage their finances. For example, in this study, individualised counselling led to significant and economically meaningful improvements in ongoing budgeting and holding a formal bank account.

These findings build on the available evidence and can be used to design and implement more effective financial education programmes and policy. The paper recommends providing personally relevant support, adequate intensity of information, and overcoming behavioral limitations to change can result in increased impact. This should include combining financial counselling and goal setting with financial education and simple follow-up actions, such as attempting to write a budget, starting informal savings, and avoiding borrowing for unforeseen expenses.


Carpena, F.; Cole, S.; Shapiro, J.; & Zia, B. (2015). The ABCs of financial education: Experimental evidence on attitudes, behaviour, and cognitive biases. Policy Research Working Paper No. 7413. Washington, D.C: World Bank.