Do not swipe the small stuff: A randomized evaluation of rules of thumb-based financial education |
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| Authors: | Brett Theodos Christina Plerhoples Stacy Devlin Hanson Julian Jamison Rebecca Daniels |
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| Institution: | 1. Metropolitan Housing and Communities Policy Center, Urban Institute, Washington, DC;2. Center on Labor, Human Services, and Population, Urban Institute, Washington, DC;3. Global Insights Initiative, World Bank, Washington, DC |
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| Abstract: | We perform the first rigorous test of a rules of thumb-based approach to financial education on consumer behavior and outcomes. We test two rules of thumb that are targeted at reducing credit card revolving and deliver them in a randomized fashion via e-mail, online banner, and physical mailer. Using monthly administrative data and pre and postintervention credit data on almost 14,000 consumers, we find that the “Do not swipe the small stuff” rule of thumb reduces participants' targeted credit card balance by an average of 2% at a cost of around $0.50 per person. The “Credit keeps charging” rule shows a decline as well but the impact is not significant. |
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| Keywords: | financial education randomized controlled trial rules of thumb |
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