Organizations have launched youth financial education courses across the globe, yet little is known about their impact on young people’s financial behaviors. In southern Ghana, researchers evaluated two youth financial literacy programs to test their impact on savings, labor, school attendance, and financial decision-making. One program integrated financial and social education, whereas the second offered only financial education. Both programs had a positive impact on overall savings behaviors, but this was driven by students moving savings from home to school rather than saving more. The program without a social education component led children to work more relative to the comparison group.
Around the world, governments, NGOs, and financial service providers have offered financial literacy programs that seek to help individuals understand financial concepts, learn planning and budgeting skills, and better navigate the financial services and products available to them. Many of these programs target youth, including through classes at school, after-school programs, mass media, and mobile phones. If youth use the lessons from financial literacy training later in life, these courses could be a cost-effective way to achieve long-term impacts on their financial behaviors and decision-making. However, some worry that encouraging children to think more about money may lead them to prioritize work at the expense of school. While there is significant interest in youth financial education, little is known about the impacts of such programs, or which approaches are most effective for mitigating reductions in school attendance.
The study included 135 government-run schools in three districts in rural and semi-urban Ghana: 30 schools in Greater Accra East, 69 in the Sekondi Takoradi metropolitan area, and 36 in Nkwanta. In total, researchers surveyed 5,291 students in the fourth through eigth grades. Though students from any grade were eligible to participate, researchers sampled these grades because the students would remain in the same school for an additional year. At baseline, 45 percent of students reported having money saved, and 41 percent reported regularly saving during the week. The average amount of savings were 4.62 Ghana cedis (US$3.08). Thirty-one percent of students reported working to earn money within the past four months. These students worked an average of 3.8 days a month and earned an average of 12.23 Ghana cedis (US$8.15).
In partnership with Aflatoun, researchers conducted a randomized evaluation to test the impact of two financial literacy programs on youth savings behavior, labor, school attendance, and financial decision-making in southern Ghana. Aflatoun is a large Dutch NGO which, as of 2015, provided social and financial education to over 3.9 million children annually in 113 countries. The first program that this study evaluated used Aflatoun’s social and financial education curriculum, which pairs instruction on saving habits and personal finance with lessons about personal exploration, children’s rights, and the pitfalls of youth labor. In contrast, the second program researchers tested, called the Honest Money Box (HMB) program, focused solely on financial education and omitted the social components of the Aflatoun curriculum. Local partners implemented both programs in schools through after-school savings clubs.
One-third of the 135 schools were randomly assigned to each of three groups: the Aflatoun program, HMB program, or a comparison group. To implement the two programs, local partner organizations trained teachers chosen by their schools to lead an Aflatoun or HMB club. Teachers instructed two multi-grade clubs and delivered the assigned curriculum in addition to providing a secure storage space for students to save at school. Clubs met, on average, once a week after school. Students saved money from their pocket change and recorded transactions in individual passbooks. For both programs, the researchers monitored the teachers to ensure that implementation met pre-determined standards.
The evaluation was conducted in the October 2010–July 2011 school year with a baseline survey in September 2010 and an endline in July 2011. At the beginning of the school year, no schools had savings clubs, and 87 percent of schools had established a club by February 2011.
Savings: Both the Aflatoun and HMB programs had positive impacts on savings behaviors relative to the comparison group, but this may be explained by students shifting savings at home to savings at school rather than saving more overall. Researchers measured the impact of the programs on two indices which included the frequency and amount of savings as well as indicators of savings attitudes. The HMB program led to an increase of 0.16 standard deviations on the savings index and the Aflatoun program led to an increase of 0.12 standard deviations relative to the comparison group. While overall savings behavior improved, neither the percentage of students saving nor the overall amount saved showed statistically significant changes in either program, suggesting the programs may have just led students to move their savings to school.
Labor supply: The HMB program led to a 4.23 percentage point increase in the likelihood that a student worked outside school relative to 24 percent who worked in the comparison group. It also led to a 0.102 standard deviation increase in a work index which measured intensity, incidence, and earnings from work. However, there was no statistically significant difference between the Aflatoun and HMB program on these two measures, meaning that the researchers found no direct evidence on the relationship between Aflatoun’s social curriculum and the likelihood of a child working.
Savings attitudes: Researchers found no evidence that the programs impacted savings attitudes or financial literacy. The relatively large changes in savings behavior without accompanying process changes could be explained two ways. First, changing attitudes may not have been necessary because pro-savings attitudes already existed. Alternatively, the schools and children could have participated in the program, but without changing their underlying attitudes, meaning they were simply complying with the curriculum while the program was ongoing. For these reasons, researchers suggest testing the long-term results of youth financial education. Long-term tracking could help shed light on the mechanisms behind the programs’ effects. For instance, if a long-term follow up showed that students did continue to save at school, it would lead researchers to conclude that the program did cause children to change their underlying ideas about savings.
Presentation from the “Impact and Policy Conference” in Bangkok, September 2012.