Being financial literate describes the individual capability to handle financial aspects of everyday life and to make meaningful and informed decisions regarding saving and consumption. Financial literacy is considered an essential life skill by the OECD (2017). Nevertheless, approximately half of the German population is not able to give correct answers to simple questions regarding financial literacy (Bucher-Koenen & Lusardi, 2011). At the same time, German schools rarely teach financial literacy at school (Plickert, 2016). This is especially problematic, as teenagers will in the future increasingly have to deal with questions regarding financial products and retirement savings.
Our project aims at, first, improving students’ financial literacy. We, hence, develop a school intervention fostering financial literacy. We run a financial literacy test before and after this intervention in order to quantify students’ learning. We focus on short-term learning by running the test directly after the intervention, and long-term learning by running the test at least six months after our intervention. In order to control for test familiarity we also ask students who did not get training in the field of financial literacy (our control group and our monetary policy group) to complete the test. Our hypothesis is that our financial literacy intervention improves financial literacy in the short and long run.
We, secondly, want to learn if students – who were taught in financial literacy – make less risky and more patient choices than students who got no teaching (control group) or were taught in other fields (we additionally run an intervention on monetary policy). So far, there exists little evidence on whether and how financial literacy affects economic preferences and whether better economic decision-making might result from better financial literacy. We concentrate on risk and time preferences, as they have proven especially relevant for people’s success in life. Less risk averse and more patient individuals display, for instance, higher levels of education, perceive higher salaries, enjoy better health and carry out less often criminal activity (Moffitt et al., 2011; Dohmen et al., 2012; Sutter et al., 2013;). It is, hence, important to learn how patient and risk neutral behavior in students can be encouraged. We hypothesize that financial literacy affects individual risk and time preferences and improves economic decision making of students in the short and long run.