DP15392 Does lasting behavior change require knowledge change? Evidence from savings interventions for young adults

Author(s): Samantha Horn, Julian C. Jamison, Dean S. Karlan, Jonathan Zinman
Publication Date: October 2020
Keyword(s): financial access, Financial Education, financial literacy, Savings
JEL(s): D12, D91, O12
Programme Areas: Labour Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15392

Is financial knowledge change necessary for lasting savings behavior change? Or, akin to the canonical Friedman billiards player, can behavior persist "as if" such knowledge is held? We randomize 240 Ugandan young-adult clubs to financial education, savings account access, both, or neither. Each education arm, but not the account-only arm, increases financial knowledge and trust in banks at one-year. But at five-years the knowledge effects disappear, and the trust effects diminish. Savings activity, wealth, and income increase at both one-year and five-years for all treatment arms, suggesting that knowledge change is unnecessary for lasting impacts on behavior and outcomes.