1

 MIRIAM BRUHN

LUCIANA DE SOUZA LEAOARIANNA LEGOVINI

ROGELIO MARCHETTIBILAL ZIA

WORLD BANK

Financial Education and Behavior Formation:

Large Scale Experimental Evidence from Brazil

Moscow, May 2013

2

Agenda

BackgroundCharacteristicsKey success factorsImpact Evaluation methodologyResultsConclusionNext steps

Background (1)

Brazil’s financial literacy status was grim

A survey had found that 82% of Brazilian consumers were unaware of the

interest rate when borrowing money, overdue installments were mostly caused by poor

financial management, 87% of families did not save for the future, 40% did not make any sort of investments with

excess income. The government decided to tackle the

subject at different levels, one of them was at high school

3

Background (2)

Why high school students Experience showed changing adult behavior is

hard with limited success stories.Students are prone to learning and

incorporating new attitudesStudents could be exposed to financial literacy

material for longer time periods. With clever design students could become the

agent of change at home.

4

Background (3)

In 2007, to develop the program the government created a working group (Grupo de Apoio Pedagógico - GAP) to interact with different stakeholders, lead a pilot implementation and subsequently role out the program.

GAP included representatives from Government financial regulators / supervisors and Financial trade associations (private sector), a broad base of stakeholders.

The goal was to develop a financial education curriculum that would reach all Brazilian public high schools.

5

6Characteristics (1)

The Teaching Material:developed three books to be used in three

consecutive school semesters / years;created to inform and guide young people

developing an independent and sound financial behavior;

assembled teaching situations aligned to the reality of the student and granted autonomy for the teachers on how to present the material;

to be used within any subject in the school (math, geography, science, etc.): cross-curricular approach

7

Characteristics (2)

Book 1 - Short-term situations related to the student’s everyday family, social life, and personal property, for example keeping track of expenses

8

Characteristics (3)

Book 2 - Medium term situations: work, entrepreneurship, large projects, for example Which career do I want to follow?

9

Characteristics (4)

Book 3 - Social Context, the country’s economy; What is corruption? Do I want more than minimum salary?

10

Characteristics (5)

Teacher’s training and involvement Key: convince teachers of financial education’s

importance ; “win their hearts and minds”; Training workshops in each of the 6 states

supplemented by virtual training (DVDs distributed to facilitate replication);

Teacher guidebook provided instructions on how to use the material and assessment methods, as well as examples of how to integrate the financial education in the curriculum.

11

Key success factors (1)

Presentation approach, many educations programs fail to make financial knowledge tangibleHow did the project address this problem?

Quality: material developed by top education experts in Brazil and rigorously tested

Use: training and materials provided to all teachers Incentives: opportunity for teachers to meet leaders in the

financial and international institutions, and awards to best performing schools

Result: rethink high school education Fun, relevant, interactive, proactive

12

Key success factors (2)

Not just knowledge but change behavior and attitudes

How did the project address this problem? interactive material with practical exercises relevant to young people’s lives actionable information cutting across all relevant spheres of life reinforce intervention

getting the family involved teaching financial literacy to parents

Result: the material motivated student try out the new behavior and helped them put it into practice

13

Key success factors (3)

Incorporate the student’s environment & household

How was this addressed? Teachers were guided for constant parent interaction

through homework assignments and exercises Parental workshop

Result: the workshop reinforced changes in student behavior and improved parental behavior

Impact Evaluation methodology (1)14

Lead by the World Bank in coordination with stakeholders in all the stages of the pilot project;

The study spanned three academic semesters, from August 2010 to December 2011,

Data collected in three rounds baseline (August 2010), follow-up 1 (December 2010), and follow-up 2 (December 2011);

Impact evaluation team participated in all teacher’s training, workshops and monitoring events throughout the pilot.

15

Impact Evaluation methodology (2)

Evaluation done in all of the 868 schools participating in the program (in 6 states in Brazil, covering 26 thousand students.

Schools that were interested in participating in the pilot were randomly assigned to Treatment group receives financial education text books for

free AND receives teacher training for how to implement the material

Control group will receive the same two school years later

Half of the parents in treatment schools were also randomly assigned to parent financial education workshop in schools

16Results

All measured effects arestatistically significant

in most cases at the 1 percent level--the likelihood that the differences in outcomes are not cause by the program is less than 1 percent

economically significant They compare favorably to other financial literacy

programs They compare favorably to other education programs If the effects held at national level, they could have

macroeconomic effects

17

Results: Knowledge

More knowledgeDistribution shift

18

Results: Knowledge;Positive Impact on Financial Proficiency

Follow-up 1 Follow-up 245

47

49

51

53

55

57

59

61

63

65

56

5960

62

ControlTreatment

19

Results: Knowledge; Distribution Shift

25%

45%30% 32%

46%

22%

control treatment

<50 51-70 >70 <50 51-70 >70

28% more treated students do very well 26% fewer treated students do very poorly

20

Results: Behavior

More saversMore savings (1.4 percentage point increase)More careful spending

21

Results: Behavior;Percentage of Students who Save

Follow-up 1 Follow-up 20

10

20

30

40

50

60

70

80

90

100

4440

49 46 ControlTreatment

22

Results: Behavior;Percentage of Income Saved

Follow-up 1 Follow-up 20

10

20

30

40

50

60

70

80

90

100

12.9 14.3

ControlTreatment

Question Not Asked in FU 1

23

Results: Behavior;Students’ Spending Behavior

More treated students make a list of expenses every month

More treated students negotiate the price and/or payment method

24

Results: Behavior;Percentage of Student who Make a List of

Expenses

Follow-up 1 Follow-up 20

5

10

15

20

25

30

35

40

45

50

13 1416 17

ControlTreatment

25

Results: Behavior; Percentage of Students who Negotiate Prices and/or Payment Methods

Follow-up 1 Follow-up 20

10

20

30

40

50

60

70

80

90

100

74 7478 77

ControlTreatment

26

Results: Attitudes towards future behavior

More financial autonomyGreater intention to save

27

Results:Financial Autonomy Index

Follow-up 1 Follow-up 246

48

50

52

54

49

5151

52

ControlTreatment

28

ResultsIntention to Save Index

Follow-up 1 Follow-up 247

48

49

50

51

52

53

54

49

5151

53

ControlTreatment

29Results:Spill-over Effects of School Program on Parents

Students’ financial education material includes exercises to be completed with parents (e.g. make a household budget)

Positive impacts on parental financial knowledge and behavior increase in parental financial knowledge increase in discussing financial matters with their

children increase in making a household budget

30

Conclusion

Pedagogical material It was adherent to the educational system Appealing for students and teachers Catalyzing effect of different subjects in the schools

Appreciation of teachers as a mediator of the learning process – 2.000 teachers trained for the pilot Training of trainers Training of teachers Distance Education for teachers and trainers

Evaluation as a strategy for scalability Results to assure the quality in dissemination Impact for referral to the educational and financial segments

31

Next StepsActions

The Ministry of Education is now scaling up the program to 5,000 Brazilian high schools

Financial education programs for primary schools

Virtual platform for national dissemination

Development of guidance to disseminate in public and private schools

Educational community of practice for the engagement and exchange of experiences between teachers

32

Thank you!

Rogelio Marchetti: rmarchetti@worldbank.orgLuciana de Souza Leão: ldl2112@columbia.edu

More information about the Brazilian Financial Education Program: Silvia Morais

silvia.morais@aefbrasil.org.br