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June 28, 2011 at 08:00 PM
Certifying financial literacy providers might be difficult and might not do much to improve the quality of financial education providers, according to officials at the U.S. Government Accountability Office (GAO).
Alicia Puente Cackley, a GAO director, summarized the GAO’s views in a report required by a financial literacy education provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Hundreds of nonprofit, private, and governmental entities now provide some form of financial education, Cackley says.
The Dodd-Frank Act calls for the GAO to look into the possibility of certifying the financial education providers, but experts told the GAO that creating a single process for diversifying such a large, diverse group of entities would be difficult and potentially burdensome for the entities certified, and that there is no consensus on which financial literacy strategies work.
GAO researchers found and analyzed 29 evidence-based studies that evaluated the effects of specific programs or approaches on consumers’ knowledge or behavior.
The researchers also looked at efforts to change consumer behavior by changing financial incentives or default options.
“Much of the literature and the experts we spoke with have noted that these various strategies to improve consumers’ financial behavior and subsequent outcomes should not be viewed as a substitute for financial education but rather as a complement to it,” Cackley says. “The most effective approach to improving consumers’ financial decision making and behavior may be to use a variety of these types of strategies in conjunction with financial education.”
