Financial Education and the Debt Behavior of the Young

Meta Brown, John Grigsby, Wilbert Van Der Klaauw, Jaya Wen, Basit Zafar

Research output: Contribution to journalArticle

22 Citations (Scopus)

Abstract

Young Americans are heavily reliant on debt and have clear financial literacy shortcomings. In this paper, we study the effects of exposure to financial training on debt outcomes in early adulthood among a large and representative sample of young Americans. Variation in exposure to financial training comes from statewide changes in high school graduation requirements. Using a flexible event study approach, we find that both mathematics and financial education, by and large, decrease reliance on nonstudent debt and improve repayment behavior. Economics training, on the other hand, increases both the likelihood of holding outstanding debt and the prevalence of repayment difficulties. Received July 9, 2014; accepted December 5, 2015 by Editor Stefan Nagel.

Original languageEnglish (US)
Pages (from-to)2490-2522
Number of pages33
JournalReview of Financial Studies
Volume29
Issue number9
DOIs
StatePublished - Sep 1 2016
Externally publishedYes

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Debt
Financial literacy
Graduation
High school
Mathematics
Economics
Event study

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Financial Education and the Debt Behavior of the Young. / Brown, Meta; Grigsby, John; Van Der Klaauw, Wilbert; Wen, Jaya; Zafar, Basit.

In: Review of Financial Studies, Vol. 29, No. 9, 01.09.2016, p. 2490-2522.

Research output: Contribution to journalArticle

Brown, M, Grigsby, J, Van Der Klaauw, W, Wen, J & Zafar, B 2016, 'Financial Education and the Debt Behavior of the Young', Review of Financial Studies, vol. 29, no. 9, pp. 2490-2522. https://doi.org/10.1093/rfs/hhw006
Brown, Meta ; Grigsby, John ; Van Der Klaauw, Wilbert ; Wen, Jaya ; Zafar, Basit. / Financial Education and the Debt Behavior of the Young. In: Review of Financial Studies. 2016 ; Vol. 29, No. 9. pp. 2490-2522.
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