Finance & PSD Impact AUGUST 2022 The Lessons from DECFP Impact Evaluations ISSUE 59 The Long-Term Impact of High School Financial Education: Evidence from Brazil Miriam Bruhn, Gabriel Garber, Sergio Koyama, and Bilal Zia Many countries around the world are Short-Term Effects implementing national strategies for financial Half of the 892 public schools in the impact education. These strategies often involve evaluation sample were randomly selected to teaching financial education in schools. receive teacher training and financial While the literature on school financial education textbooks. Control group schools education has expanded during recent years, did not receive training or materials but we still know little about the effects of these participated in the surveys. Students in the programs on long-term financial behavior, as randomized control trial graduated from high most studies measure effects less than a year school at the end of the program and the following the intervention. control group was never exposed to the financial education program. In 2011, Bruhn et al. (2016) studied the impact of a high school financial education The short-term effects showed increased program through a randomized control trial financial knowledge, as well as positive with about 25,000 students from 892 schools effects on savings attitudes, self-reported in six Brazilian states (see impact note 26). In saving up for purchases, money management, new research, we use administrative data to and budgeting. On the flip side, the program follow 16,000 of these students for the next led to significantly greater use of expensive nine years, allowing us to measure the effect financial products such as credit cards, and a of the program on long-term financial higher likelihood of being behind on credit behavior and employment outcomes. repayments, likely because the program tried to inform students about these products but High School Financial Education Program did not actively discourage their use. The program was developed and implemented as part of the National Strategy Administrative Data for Financial Education (ENEF). It spanned Based on students’ name and age, we the 2010 and 2011 academic years, and was obtained the taxpayer identification number integrated into classroom curricula of (CPF) for nearly 16,000 students in the Mathematics, Science, History, and original sample. We then used the CPF to Portuguese during the two last years of high consult administrative data housed at the school. The instruction used new textbooks Central Bank of Brazil (BCB). This data with interactive classroom exercises, take- includes bank account ownership (but not home exercises such as creating household account balances), use of various credit budgets, and role-play assignments. The products, as well as information on formal textbooks covered nine themes: everyday employment status and formal family life, social life, personal property, microenterprise ownership. We follow young work, entrepreneurship, large expenditures, adults from when they finished high school in public goods, the country’s economy, and the 2011, until February 2020, just before the world economy. COVID-19 pandemic hit Brazil. Do you have a project you want evaluated? DECRG-FP researchers are always looking for opportunities to work with colleagues in the Bank and IFC. If you would like to ask our experts for advice or to collaborate on an evaluation, contact us care of the Impact editor, David McKenzie (dmckenzie@worldbank.org) Long-Term Effects likely to own a formal microenterprise Comparing the randomized treatment and than control students (a 0.69 percentage control groups gives four main findings: point increase relative to 6.9 percent of • The financial education program had no control students with a formal effect on long-run bank account microenterprise). And treatment group ownership, but a high percentage of students are 1.2 percentage points less students (85 percent) have a bank account likely to hold a job with a written after graduating high school. contract, relative to 49.5 percent of • Treatment students use fewer expensive control students with a formal job, credit products. Treatment students are suggesting that the program caused them 1.4 percentage points less likely to have to switch occupations from being credit card debt and 0.9 percentage point employees to being business owners. less likely to use overdrafts, compared to 23 percent of control students with credit Policy Implications card debt and 11 percent of control 1. High school financial education can students with overdrafts. improve long-term financial outcomes of • The program led to a lower likelihood of students. having loans with repayment delays, by 2. The long-term effects may differ from the about 0.9 percentage point, compared to short-term effects. In the short run, 15 percent of control students with treatment students were more likely to repayment delays (see figure 1). use expensive sources of credit than control students, while treatment students Figure 1: Credit Repayment Delays over are less likely than control students to use Time these sources in the long run. It could be that in the short-run, students experimented with expensive credit early and realized that this was not a sound financial decision. It is also likely that the credit they used while still in high school was only for small purchases, whereas in the long term the stakes are higher, and students avoid larger amounts of debt. 3. Financial education can affect employment outcomes, particularly if it is • Eight to nine years after graduating, comprehensive and includes modules on treatment students are 10 percent more work and entrepreneurship. For further reading see: Bruhn, Miriam, Gabriel Garber, Sergio Koyama, and Bilal Zia. “The Long-Term Impact of High School Financial Education: Evidence from Brazil,” World Bank Policy Research Working Paper no. 10131, July 2022. Recent impact notes are available on our website: https://www.worldbank.org/en/research/brief/finance- and-private-sector-impact-evaluation-policy-notes