Non-experimental impact estimates of school financial education exposure on financial literacy outcomes

Abstract Non-experimental research is increasingly used in economics to evaluate the impact of interventions on outcomes. This article contributes to the literature on non-experimental impact evaluation by estimating the causal effect of school-based financial education on financial competence outcomes using observational data from Italy. In the PISA 2012 assessment for financial literacy, Italy scored 466 points, reflecting the performance of 15-year-old students in understanding and applying financial concepts. Italian students performed below average compared to their peers in other OECD countries, where the average score was 500 points. Nonetheless, we find performance differences between cohorts exposed to financial education in a mandated high school curriculum and those who were not. Specifically, the exposure effect estimate resulted in an Average Treatment Effect on the Treated (ATT) of 25.68 score points using Nearest Neighbor Propensity Score Matching. We estimated an average financial literacy score of 479 points for Italian students exposed to school financial education. As a sensitivity analysis to verify the robustness of our treatment effect estimates, we applied two alternative propensity score-based methods and one exact matching method. The analysis identified a significant difference of at least 20 points in financial literacy scores between students exposed to school-based financial education and those who were not. Our non-experimental evidence is crucial in the ongoing heated and controversial debate on including economics and finance subjects as compulsory components in the secondary school curriculum. The results presented in this article can help education policymakers and educators develop evidence-based policies for school-based financial education.