Five Steps to Planning Success

Experimental Evidence from US Households

Published in: Oxford Review of Economic Policy (2014) 30 (4): pages 697–724. doi: 10.1093/oxrep/gru036

Posted on on April 13, 2017

by Aileen Heinberg, Angela A. Hung, Arie Kapteyn, Annamaria Lusardi, Anya S. Samek, Joanne K. Yoong

Read More

Access further information on this document at Oxford Academic

This article was published outside of RAND. The full text of the article can be found at the link above.

While financial knowledge has been linked to improved financial behaviour, there is little consensus on the value of financial education, in part because rigorous evaluation of various programmes has yielded mixed results. However, given the heterogeneity of financial education programmes in the literature, focusing on 'generic' financial education can be inappropriate and even misleading. Lusardi (2009) and others argue that pedagogy and delivery matter significantly. In this paper, we design and field a low-cost, easily-replicable financial education programme called 'Five Steps', covering five basic financial planning concepts that relate to retirement. We conduct a field experiment to evaluate the overall impact of Five Steps on a probability sample of the American population. In different treatment arms, we quantify the relative impact of delivering the programme through video and narrative formats. Our results show that short videos and narratives (each takes about 3 minutes) have sizeable short-run effects on objective measures of respondent knowledge. Moreover, keeping informational content relatively constant, format has significant effects on other psychological levers of behavioural change: effects on self-efficacy are significantly higher when videos are used, which ultimately influences knowledge acquisition. Follow-up tests of respondents' knowledge approximately 8 months after the interventions suggest that between one-quarter and one-third of the knowledge gain and about one-fifth of the self-efficacy gain persist. Thus, this simple programme has effects both in the short run and medium run.

Research conducted by

This report is part of the RAND Corporation External publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.