Selection into Financial Education and Effects on Portfolio Choice

We study the impact of a financial education program on portfolio choices in a setting that allows us to examine both participation decisions and differences in program benefits across individuals. We directly elicit willingness to pay for financial education and show that individuals with higher financial literacy, greater confidence in applying new knowledge, and higher expected returns are willing to pay more. Using incentivized portfolio allocation tasks, we develop outcome measures tailored to individual risk preferences and show that financial education improves decision quality along these dimensions. The program increases the share of participants who experience an improvement by 20 percentage points, corresponding to average gains of 3.2 percentage points of initial wealth. Individuals with the highest willingness to participate benefit disproportionately from the program, with important implications for the design and evaluation of financial education initiatives. By isolating a specific investment skill in a setting with voluntary participation, our design sheds light on how selection into financial education shapes measured program effects and informs the assessment of broader workplace and public training programs. This paper was accepted by Marie Claire Villeval, behavioral economics and decision analysis. Funding: The authors thank the Pension Research Council of Wharton School at the University of Pennsylvania, as well as the Retirement and Savings Institute at HEC Montréal, for generous research funding. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2024.08268 .