Description of the programme

This study is a randomized experiment with public school employees. It aims to test the extent to which the offer of online financial education has a positive effect on financial knowledge, financial planning and management behaviours and attitudes.

The project builds on the Wisconsin Credit Union League “REAL Progress & Pathways to Prosperity” (RP3) programme funded by the Investor Protection Trust in 2009-2010. That study offered a 10 hour online education programme in the workplace using random assignment at the firm level. This study used a 5 hour online education programme randomised at the employee level.

Participants were all the employees of the Appleton Area School District (AASD) in the U.S. 1,396 employees were randomly assigned into a treatment and a control group by the study’s researchers. Those randomly assigned into the treatment group were offered the opportunity to enrol in a free online financial education course; the remaining employees were not offered online education until after the conclusion of the study.

The online programme was provided by a private firm and comprised five modules: 1) Getting Started on Investing; 2) Basics of Personal Finance; 3) Basics of Investing; 4) Basics of Retirement Planning; 5) Additional Ways to Save for Retirement. Each of the five online education modules began with pre-test for participants to gauge their knowledge, and was followed with a self-guided tutorial.

The study

The study conducted a randomised controlled trial (RCT) with the treatment group offered the programme comprising 717 individuals, of which 121 individuals responded to the offer to participate in the programme (17% participation rate). The control group consisted of 679 employees not offered the online financial education course.

All employees were asked to complete a survey on their self-assessed financial knowledge, attitudes, and self-reported behaviour, with a total of 746 employees responding (52% response rate), including 361 individuals from the treatment group (50% response rate) and 385 from the control group (57% response rate). There were 88 responses from individuals that both participated in the online financial education course and responded to the survey.

Three scales were constructed based on the survey questions: perceived financial knowledge; objective knowledge, and financial confidence. The study tested the hypotheses that financial education would lead to improvements in each of these scales, while controlling for other variables such as age, gender, education, income. The outcomes are measured at a follow-up with subjects after three months.

The paper also presents a useful literature review on the impact of financial education programmes in the workplace.

What are the outcomes?

• The evaluation assessed the extent to which the project had helped older people to increase their income by providing benefits advice and knowledge about grants to give them a better understanding of the potential sources of additional income
• The evaluation assessed the extent to which the project had helped older people to experience less fuel poverty by providing clients with advice on energy efficiency to raise their awareness of the potential help available
• The evaluation assessed whether clients feel more confident, that they have better ability and understanding of money management and are aware of independent financial advice available
• The evaluation considered whether the project raised awareness of the advice and support available amongst other sector professionals

Key findings

• Initial results support the hypothesis that offering financial education courses leads to improvements in self-assessed and objective financial knowledge. The treatment variable is statistically significant at the 5% level (i.e. p<0.05) in the measure of self-assessed knowledge and the measure of objective knowledge. The effect of each is positive but relatively small – roughly 1/6th of the standard deviation. This may be in part be explained by the low take-up (23%) of the course.
• The results do not suggest that the offer of online financial education has a positive causal effect on self-reported confidence, financial planning and management behaviours. The ‘treatment’ variable (i.e. being offered the online education programme) was not significant at the 5% level for this measure (I.e. . p>0.05).

In summary, the effects are small or non-existent in this study. Financial behaviour: Gender, age, education and income are significant factors. For example younger ages have given less thought to retirement (p<0.001), are less likely to use a budget (p<0.01), but more likely to have money automatically deposited in a savings or investment account (p<0.05)

Points to consider

• The population in this study includes a homogenous group of public school employees who have a well-funded defined benefit pension. In general this is a group who is well educated and financially stable and there may be less margin for improvements in knowledge or behaviour. It may be that results do not necessarily apply to a more heterogeneous group or a group with lower levels of formal education.
• Take-up rates are relatively low. The study uses self-reported measures as opposed to administrative data. Finally, results are based on a short three month follow-up after initial assignment to the treatment group and offer of online education so it may be that changes in behaviour would take longer to emerge.

Full report

Online financial education for employees - full report