State Mandated Financial Education and the Credit Behavior of Young Adults

Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C., Finance and Economics Discussion Series No. 2014-68

42 Pages Posted: 15 Sep 2014

See all articles by Alexandra Brown

Alexandra Brown

Board of Governors of the Federal Reserve System

J. Michael Collins

University of Wisconsin - Madison; Follette School of Public Affairs

Maximilian D. Schmeiser

Amazon Lending

Carly Urban

Montana State University - Bozeman - Department of Agricultural Economics and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 29, 2014

Abstract

In the U.S., a number of states have mandated personal finance classes in public school curricula to address perceived deficiencies in financial decision-making competency. Despite the growth of financial and economic education provided in public schools, little is known about the effect of these programs on the credit behaviors of young adults. Using a panel of credit report data, we examine young adults in three states where personal financial education mandates were implemented in 2007: Georgia, Idaho, and Texas. We compare the credit scores and delinquency rates of young adults in each of these states pre- and post-implementation of the education to those of students in a synthetic control state and then bordering states without financial education. We find that young people who are in school after the implementation of a financial education requirement subsequently have higher relative credit scores and lower relative delinquency rates than those in control states.

Keywords: financial literacy, financial education, personal finance, synthetic controls

Suggested Citation

Brown, Alexandra and Collins, J. Michael and Schmeiser, Maximilian D. and Urban, Carly, State Mandated Financial Education and the Credit Behavior of Young Adults (August 29, 2014). Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C., Finance and Economics Discussion Series No. 2014-68, Available at SSRN: https://ssrn.com/abstract=2495884 or http://dx.doi.org/10.2139/ssrn.2495884

Alexandra Brown

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

J. Michael Collins

University of Wisconsin - Madison ( email )

United States
6086160369 (Phone)

Follette School of Public Affairs ( email )

1180 Observatory Drive
Madison, WI 53706-1393
United States

Maximilian D. Schmeiser (Contact Author)

Amazon Lending ( email )

Seattle, WA 98144
United States

Carly Urban

Montana State University - Bozeman - Department of Agricultural Economics and Economics ( email )

Bozeman, MT 59717-2920
United States
4069942005 (Phone)

HOME PAGE: http://www.montana.edu/urban

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