Friday, November 7, 2014
Cochiti (Convention Center)
*Names in bold indicate Presenter
Policymakers have increasingly emphasized financial education as a solution to perceived failures in household financial decision-making. In the U.S., a number of states have mandated personal finance classes in public school curricula. Despite a long history of financial and economic education in public schools, little is known about the outcomes of these programs on the credit management behaviors of young adults as they begin to establish financial independence from their parents. If young people are naive about the ramifications of taking on credit and paying bills on time, financial education in public schools may raise the salience of paying attention to applying for and managing credit as well as paying bills on time. Using a panel of credit report data, this analysis examines three states (Georgia, Idaho, and Texas) where a new personal financial education mandates was implemented. This policy shift is used to estimate credit scores and delinquencies in young adulthood by cohorts of students estimated to be exposed to the school system before and after the policy. Young people who are in school after the implementation of state mandates show evidence of modestly greater credit scores and lower delinquency rates. These effects are robust to a variety of matching and differencing estimators and, to the extent improved credit behaviors are a policy objective, these results may support the implementation of similar financial and economics education in the K-12 curricula of other states.