Evidence Based Economic and Financial Literacy Principles from Peru

Updated: Aug 1

Written by Connor Dudas and Gabe Agüero

Analysis of: The Impact of School-Based Financial Education on High School Students and Their Teachers: Experimental Evidence from Peru
 by Veronica Frisancho

In 2015, the Peruvian government established the National Financial Inclusion Strategy, which articulated the principle of financial education as a process of continuous learning and development and not exclusively as a remedial intervention for adults. Consequently, a significant priority of Peru’s National Financial Inclusion Strategy was the provision of financial education to all primary and secondary students by 2021. The Peruvian Ministry of Education collaborated with the Superintendency of Banks and Insurance and the Center of Studies from the Peruvian Association of Banks to cultivate a financial education curriculum for high school students. The Peruvian financial education intervention, Finanzas en mi Colegio, targeted students ages 14 through 16, the equivalent to ninth, tenth, and eleventh grades in the United States. Preliminary and concluding financial knowledge examinations were conducted. Survey data included questions on personality traits correlated with financial behavior. Utilizing statistics from a randomized controlled experiment in 300 public high schools in Peru, Frisancho investigates the consequences and efficacy of school-based financial education programs in the financial knowledge and socioeconomic behavior of students and instructors. The introduction of financial education improved students’ and teachers’ financial knowledge by 0.14 standard deviations and 0.32 standard deviations, respectively. Additionally, the aforementioned intervention exerted significant positive influence on discipline and consumption habits among participants. The education advantages identified are not obtained at the detriment of student performance in other disciplines. Rather, the intervention stimulated overall performance improvements as quantified by cumulative grade point average, in which students exposed to the intervention treatment improved by 0.18 standard deviations. Grade specific financial knowledge increased by 0.14 standard deviations. The treatment produced a 0.18 standard deviation increase in cumulative GPA. Additionally, mathematics and language performance increased by approximately 0.15-0.16 standard deviations.

The socioemotional characteristics examined included conscientiousness, self-control, impulsiveness, risk aversion, and the prevalence of hyperbolic time preferences. Finanzas en mi Colegio successfully precipitated the development and crystallization of self-control skills. The aggregate improvement was 0.03 standard deviations, with the largest individual deviation being identified among tenth graders (0.06 standard deviations). The intervention was not explicitly developed to alter the aforementioned socioemotional traits but nonetheless fostered increased financial discipline, risk aversion, and intertemporal rationality. On aggregate, the intervention was extremely successful at improving financial knowledge and academic performance. Two diverging explanations emerged for the unanticipated and considerable improvements in academic performance. First, the financial literacy curriculum may have generated complementary synergies with material covered in other courses. This explanation is inconsistent with the indiscriminate nature of the academic improvement identified. Alternatively, the intervention may have stimulated more holistic dimensions of student engagement, such as an appreciation or passion for learning, due to the perceived practicality and applicability of financial literacy information. Qualitative evidence collected through focus groups corroborates this hypothesis: teachers report that they observed greater levels of student motivation due to the perception of usefulness and feasibility surrounding the intervention.

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