Financial literacy training programs and financial behaviour: Why people do not become “financially literate”?

Abstract

The paper takes a critical view on the prevalent approaches to developing financial literacy programs. It has been shown that meta-analytical and review studies indicate low efficiency of financial literacy improvement programs: their effect on financial behavior is either statistically insignificant or statistically significant, but practically negligible. Among potential reasons of financial literacy programs low efficiency the role of behavioral factors in financial decision making and the impossibility of determining “financially literate” behavior from the perspective of an outside observer are considered. It is concluded that the currently dominant criteria for assessing financially competent behavior can be characterized either as procedural, within which not the consequences of financial decisions are considered, but how consciously they are taken, or as normative, within which the government differentiates the consumers attitudes into wrong and right. Both groups of criteria are based on a non-economic understanding of rationality.