Does financial education actually help improve consumers’ financial habits? A report released Oct. 8 found it might not.

Efforts to improve financial literacy are responsible for just 0.1% of changes in financial behavior, the paper found. Lower income populations, arguably the people who would benefit most from financial literacy efforts, showed the least improvement.

The authors analyzed 168 papers that cover 201 studies on the relationship of financial literacy and education to financial behavior. 

The paper was written by Daniel Fernandes of the Catholic University of Portugal, Erasmus University; John Lynch Jr., of the Center for Research on Consumer Financial Decision Making at the University of Colorado-Boulder, Leeds School of Business; and Richard Netemeyer of the University of Virginia, McIntire School of Commerce.

The authors noted that any education will decay over time, and the benefits of extensive financial education were negligible less than two years after instruction.

“Creating financial literacy interventions is an obvious and common-sense response to the increased complexity of the financial world,” the authors wrote. However, they referred to a 2011 book by Duncan Watts to point out one glaring problem: “Everything is obvious (once you know the answer).”

One distinction the authors considered in their analysis is financial literacy as the result of an educational event compared with literacy measured by a test. Educational events explained 0.12% of later changes in financial behaviors among the general population. Among the low-income population, educational events were responsible for just 0.06% of changes made.

Studies that tested respondents’ literacy higher rates of change in behavior later on: 1.27% for the low-income sample and 1.8% for the general population.

“Might effect-sizes of manipulated financial literacy depend on the type of intervention?” the authors asked. “We found statistically significant but practically small differences among: counseling, exposure to information about financial education, financial education in high school, multiple sources of financial education, participation in seminars or workshops, and participation in a program of financial education. These intervention forms explained, respectively, 0.14%, 0.05%, 0.15%, 0.12%, 0.18%, and 0.10% of the variance in the financial behaviors studied.”

The authors suggest the discrepancy between measured literacy and manipulated literacy’s success is based on two things. First, the education acquired in a single event will decay over time. They noted that many of the papers they studied left out details about the educational event, but that there was a mean delay of 11 months between education and measuring success. It’s possible that behavioral changes were more pronounced in the months immediately following the event, but slacked off as participants went back to their old ways.

Interestingly, the authors found the more time spent educating participants in a single event, the more they lost over time. “Importantly, at delays of 18.5 months or greater, there is no significant effect of even 24 hours of instruction. After 23.5 months of instruction, there are no significant effects of amount of instruction,” they wrote.

However, short sessions one after another had similar effect to long sessions spread further apart. “We observe equal effects for six hours of intervention at no delay and 18 hours of intervention at 10 months of delay, and equal effects of one hour of instruction at no delay and 12 hours at 10 months delay. We argue that these findings militate toward ‘just in time’ financial education rather than lengthy education years before the behaviors it is intended to change.”

Another explanation is that financial education just doesn’t do much to increase the knowledge that leads to behavioral change. They found education events explained only 0.44% of the variance in financial knowledge, compared with events on science and math (2.25%), organizational and work setting interventions (5.76%), and special subjects like creative thinking or career counseling (5.29%).

Check out Americans Agree Financial Literacy Is Important, but in Short Supply on ThinkAdvisor.