Are Economics and Financial Literacy Education Substitutes? A Difference-in-Difference Approach to Measuring the Returns to Financial Literacy Education.

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States are increasingly mandating financial literacy education as a high school graduation requirement. However, most states already include economics education as part of their curriculum, and it is unclear whether financial literacy education and economics education differ. We examine the returns to financial literacy education and compare the gains in financial knowledge to those acquired in economics courses. Using observational data (n=127) and difference-in-difference methodology we test for differences in returns across courses at the college level. We find that both financial literacy courses and economics courses increase financial knowledge. We also find no evidence that financial literacy courses increase understanding of financial literacy concepts at a higher rate than economics courses. We disaggregate financial knowledge into six areas of financial understanding as defined by the Test of Financial Literacy. We find the returns to financial literacy education are higher than economics courses in five categories, however these findings are driven mostly by observable differences between the financial literacy and economics students. We also find the returns to financial literacy education are higher for female students, even when controlling for observables. Female students experience a gain of 0.8 standard deviations in the Test of Financial Literacy, when enrolled in financial literacy courses relative to economics courses, providing evidence that financial literacy education is better at narrowing the gender financial literacy gap. Our results are important to policymakers introducing financial literacy education mandates and to school administrators determining implementation.