Research

Studies show that learning about personal finance vastly improves people's overall financial health and well-being.

The following research papers appear in their original form. Financial Building Blocks receives no compensation for posting research on our site. Contact us to submit research.


Auto Title Loans: Market practices and borrowers’ experiences

Source: The Pew Charitable Trusts

"More than 2 million people, approximately 1 percent of American adults, use high-interest automobile title loans annually, borrowing against their cars. A lender, after inspecting a car brought in by a prospective borrower, makes a loan based on a portion of the vehicle’s value and keeps the title as collateral while the customer continues using the car. The borrower usually must repay the principal plus a fee in a single balloon payment, typically after one month, and the lender has the right to repossess the car if the loan is not repaid…. Overall, the research demonstrates that the title loan market suffers from the same fundamental problems as the payday loan market, including unaffordable balloon payments, unrealistically short repayment periods, and unnecessarily high prices."

The Cost of Complexity in Federal Student Aid: Lessons from Optimal Tax Theory and Behavioral Economics

Source: National Tax Journal

"The federal system for distributing student financial aid rivals the tax code in its complexity. Both have been a source of frustration and a focus of reform efforts for decades, yet the complexity of the student aid system has received comparatively little attention from economists. We describe the complexity of the aid system, and apply lessons from optimal tax theory and behavioral economics to show that complexity is a serious obstacle to both efficiency and equity in the distribution of student aid. We show that complexity disproportionately burdens those with the least ability to pay and undermines redistributive goals. We use detailed data from federal student aid applications to show that a radically simplified aid process can reproduce the current distribution of aid using a fraction of the information now collected."

Debt, Jobs, or Housing: What’s Keeping Millennials at Home?

Source: Federal Reserve Bank of New York

"Steep increases in the rate of young people living with parents or other substantially older household members have emerged as youth increasingly forsake living alone or with groups of roommates. Homeownership at age thirty shows a precipitous drop following the recession, particularly for student borrowers. In an effort to decompose the contributions of housing market, labor market, and student debt changes to the observed changes in young Americans’ living arrangements, we model flows into and out of co-residence with parents. Estimates suggest countervailing influences of local economic growth on co-residence: strengthening youth labor markets support moves away from home, but rising local house prices send independent youth back to parents. Finally, we find that student loans deter independence: state-cohort groups who were more heavily reliant on student debt while in school are significantly and substantially more likely to move home to parents when living independently, and are significantly and substantially less likely to move away from parents when living at home."

Analysis of Differences between Consumer- and Creditor-Purchased Credit Scores

Source: Consumer Financial Protection Bureau

"When consumers purchase their credit scores from one of the major nationwide consumer reporting agencies (CRAs), they often receive scores that are not generated by the scoring models use to generate scores sold to lenders. The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Consumer Financial Protection Bureau (CFPB) to compare credit scores sold to creditors and those sold to consumers by nationwide CRAs and determine whether differences between those scores disadvantage consumers. CFPB analyzed credit scores from 200,000 credit files from each of the three major nationwide CRAs: TransUnion, Equifax, and Experian."

Five Simple Questions That Reveal Your Financial Health and Wealth

Source: Center for Household Financial Stability

"A few simple questions can reveal a lot about your financial health.
If you save regularly, make all of your payments on time, pay off your entire credit card balance when due, maintain a healthy stock of safe and liquid assets, and never take on debts that put a heavy strain on your monthly income, you are very likely to be financially healthy and able to accumulate significant wealth. If you do none of those things, you are very likely to be financially unhealthy."

The Demographics of Wealth: How Age, Education and Race Separate Thrivers from Strugglers in Today’s Economy

Source: Center for Household Financial Stability

"A new economic reality line is emerging in the U.S. It’s between the thrivers, the one-quarter of the population who are accumulating wealth, and the strugglers, the other three-quarters who are not. As we show, race, education and age increasingly determine whether someone is a thriver or a struggler."

5 Tips for Shopping for a Mortgage

Source: The Federal Reserve

"A mortgage loan is one of the most complex, most expensive financial commitments you will ever assume—it's okay to ask for help"

5 TIPS: Improving Your Credit Score

Source: Board of Governors of the Federal Reserve System

"Many credit- scoring models consider the number and type of credit accounts you have. A mix of installment loans and credit cards may improve your score. However, too many finance company accounts or credit cards might hurt your score."

Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances

Source: Federal Reserve Bulletin

"Between 2010 and 2013, mean (overall average) family income rose 4 percent in real terms, but median income fell 5 percent, consistent with increasing income concentration during this period.... Families at the bottom of the income distribution saw continued substantial declines in average real incomes between 2010 and 2013, continuing the trend observed between the 2007 and 2010 surveys."

Americans Make Hard Choices on Social Security: A Survey with Trade-Off Analysis

Source: National Academy of Social Insurance

"The study included an online survey of 2,013 Americans ages 21 and older to explore their attitudes toward Social Security and their views about its future.... 77% agree that it is critical to preserve Social Security benefits for future generations, even if it means increasing Social Security taxes paid by working Americans, and 83% agree it is critical to preserve Social Security benefits for future generations, even if it means increasing taxes paid by top earners."

Annual Report of the Consumer Finance Protection Board Student Loan Ombudsman

Source: Consumer Financial Protection Bureau

"While federal student loans offer options to avoid default through several loan modification and alternative repayment programs, lenders and servicers of private student loans generally do not. Many complaints indicate that borrowers sought to negotiate a modified repayment plan during a period of financial distress, but lenders and servicers provided no options, leading the borrower to default. These complaints closely mirror problems found in the mortgage servicing market, as large numbers of homeowners sought to avoid foreclosure. The largest subset of private student loan complaints handled by the Bureau relate to the lack of repayment options and flexibility in times of distress."

Building Wealth A Beginner's Guide to Securing Your Financial Future

Source: Federal Reserve Bank of Dallas

"It's possible to meet your financial goals. By choosing to budget, save and invest, you can pay off debt, send your child to college, buy a comfortable home, start a business, save for retirement and put money away for a rainy day. Through budgeting, saving and investing, building credit and controlling debt, all these goals are within your reach."

Do the Benefits of College Still Outweigh the Costs?

Source: Federal Reserve Bank of New York

"The sluggish labor market recovery from the Great Recession has refueled the debate about the value of a college degree. Although the unemployment rate of college-educated workers has remained well below average, there is mounting evidence that recent college graduates are struggling to find good jobs. At the same time, college tuition has risen sharply, reaching record highs, and college graduates are increasingly finding themselves saddled with debt from student loans used to finance their education. By the end of 2013, aggregate student loan debt in the United States exceeded $1 trillion, and more than 11 percent of student loan balances were either severely delinquent or already in default. With the costs of college rising and the benefits in doubt, many are wondering whether earning a college degree still pays."

Economic and Personal Finance Education in our Nation's Schools 2014

Source: Council for Economic Education

"2014's Survey of the States shows notable progress over the past 15 years since the first survey was conducted, particularly in economic education. But progress in personal finance has slowed its pace since the mid- 2000's. The biennial Survey of the States serves as an important benchmark for our progress, revealing both how far we've come and how far we still have to go."

Student Loan Debt and Economic Outcomes

Source: Federal Reserve Bank

"This policy brief advances the growing literature on how student loan debt affects individuals' other economic decisions. Specifically, it examines the impact of student loan liabilities on individuals' homeownership status and wealth accumulation.... Overall, student debt lowers the likelihood of homeownership for a group of students who attended college during the 1990s. There is also a fairly strong negative correlation between student loan debt and wealth (excluding student loan debt) for a group of households with at least some college experience."

Student Loans: Are Yours Afloat?

Source: Federal Reserve Bank of Richmond

"Before hitting the high seas of student loan management, it's important to get your sea legs under you. Knowing how student loans are different from other types of loans can help you make informed decisions about how to manage repayment, particularly in potentially rough seas along your journey. As you set out across the bay, walk the deck to acquaint yourself with the unique qualities of student loans."

The Folklore of Finance: How Beliefs and Behaviors Sabotage Success in the Investment Management Industry

Source: State Street Center for Applied Research

"The industry faces a new crisis; but rather than being financial, this is a crisis of faith, driven by ;the 3 Ds.; Investors share a deep distrust of the industry that leads to their dissatisfaction, which drives increasing disintermediation, where a growing number of investors believe they can do the job of investment professionals themselves—better and for less money. Unfortunately, this disintermediation can be counter to investors' long-term best interests. What is behind the industry's failure? Ironically, the pursuit of investment success has given rise to its biggest impediment: the ;Folklore of Finance.; This folklore reflects the shared beliefs, rooted in human bias, that govern both investment professionals' and investors' behaviors. Despite what are often positive motivations behind these behaviors, their effects often impede healthy decision-making."

Using Your House for Income in retirement

Source: Center for Retirement Research at Boston College

"It's something Americans increasingly need to consider. And increasingly need to do.... Your house is likely your largest store of wealth. If you need more income, it's the logical place to look."

Social Security: Understanding the Benefits

Source: Social Security Administration

"Most of our beneficiaries are retirees and their families—about 41 million people. But Social Security was never meant to be the only source of income for people when they retire. Social Security replaces about 40 percent of an average wage earner’s income after retiring, and most financial advisors say retirees will need 70 percent or more of pre-retirement earnings to live comfortably. To have a comfortable retirement, Americans need much more than just Social Security. They also need private pensions, savings and investments."

An Invisible Finance Sector: How Households Use Financial Tools of Their Own Making

Source: Center for Financial Services Innovation

"People run their financial lives with a variety of tools. The first tools that come to mind are likely to be formal, like checking accounts and credit cards. But households often use informal tools that are harder to see from outside, like short-term loans from friends or relatives…. [This paper details] the role of informal financial tools in the lives of two families."

Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges

Source: Stephanie Riegg Cellini and Claudia Goldin

"We use state administrative data to provide the first comprehensive estimates of the size of the for-profit higher education sector. Our analysis includes institutions missed in official counts because they do not participate in federal student aid programs. We estimate that the number of for-profit institutions is double the official count and the number of for-profit students is nearly one-third greater. Aid-eligible institutions charge tuition for sub-baccalaureate (mainly certificate) programs that is about 78 percent higher than that charged by comparable programs in non-participating institutions..."

Major Decisions: What Graduates Earn Over Their Lifetimes

Source: The Hamilton Project

"This economic analysis—with an accompanying interactive feature—explores career earnings by college major. Drawing upon data from the Census Bureau’s American Community Survey, we examine earnings for approximately 80 majors, focusing on both annual earnings for each year of the career and cumulative lifetime earnings. The new interactive feature allows you to compare career earnings among bachelor’s degree graduates for all 80 majors along with earnings for workers with less education."

Promoting Lifetime Income in Retirement Savings Accounts

Source: The Brookings Institute

"Over the next two decades, an estimated 75 million Americans who were born during the postwar years will retire. A major challenge for them is how to allocate their resources when they do not know exactly how long they will live. If they live longer than expected, they face the dire prospect of running out of funds late in life. Alternatively, and perhaps equally unfortunately, they may be too conservative when drawing down their resources and may unnecessarily forgo consumption that they could safely have enjoyed earlier in their retirement."

Financial Literacy: How Could Financial Literacy Be More Effective

Source: The Brookings Institute

"We conclude that improving financial literacy should be a first-order concern for policy-makers, and that gains could accrue not only to the affected individuals, but also to their family members and society at large."

Financial Literacy: An Overview of Practice, Research, and Policy

Source: The Federal Reserve Bulletin

"Given the resources now devoted to financial literacy training, this is an opportune time to evaluate the research, identify best practices, and consider public policy options that would further the goal of creating more financially savvy consumers."

Financial Capability in the United States

Source: Financial Industry Regulatory Authority (FINRA)

"[W]e are pleased to see progress in two of the areas measured in both surveys: More respondents reported having a rainy day fund, and fewer respondents reported difficulty in making ends meet. The improvement in Americans’ ability to make ends meet reflects the change in the overall economic conditions in the United States from 2009 to 2012. However, many consumers continue to feel financial strains, and the study found that a large number of Americans borrow money in potentially expensive ways and carry too much.

Beyond that, the study found that financial literacy levels remain low. This finding— along with the potentially dangerous borrowing habits—underscores the need for us to continue to explore innovative ways to build financial capability among consumers."

Having it All: Girls and Financial Literacy

Source: The Girl Scouts

"While some research has suggested that girls have lower financial literacy than boys and also lower confidence in their financial knowledge, very few studies have focused on girls specifically. To address this gap, the Girl Scout Research Institute conducted a nationwide survey with over 1,000 girls ages 8−17 and their parents in an effort to better understand girls’ financial literacy and their confidence about, attitudes towards, and experiences with money."

Visual Tools and Narratives: New Ways to Improve Financial Literacy

Source: Annamaria Lusardi, Anya Savikhin Samek, Arie Kapteyn, Lewis Glinert, Angela Hung, and Aileen Heinberge

"Financial literacy, and specifically the knowledge of financial concepts that are the basis for financial decision-making, is one important predictor of retirement planning, not just in the US but also worldwide."

Financial Literacy: Do People Know the ABCs of Finance?

Source: Annamaria Lusardi

"Financial literacy impacts financial decision-making, with implications that apply to individuals, communities, countries, and society as a whole. Given the lack of financial literacy among the population, it may be important to remedy it by adding financial literacy to the school curriculum."

The Economic Importance of Financial Literacy: Theory and Evidence

Source: Annamaria Lusardi and Olivia S. Mitchell

"Despite the rapid spread of such financially complex products to the retail market-place, including student loans, mortgages, credit cards, pension accounts, and annuities, many of these have proven to be difficult for financially unsophisticated investors to master. Therefore, while these developments have their advantages, they also impose on households a much greater responsibility to borrow, save, invest, and decumulate their assets sensibly by permitting tailored financial contracts and more people to access credit."

Examining Financial Education: How Literacy and Interventions

Source: National Endowment for Financial Education

"While policymakers generally accept that financial literacy drives better decision making, findings vary widely when researchers investigate the strength and dynamics of the relationship between what people know with regard to personal finance and how that knowledge affects their financial behavior.

To better understand these discrepancies and to extract higher-order findings from the sum results of available research to date, the National Endowment for Financial Education (NEFE) funded a meta-analysis—a scientifically robust review of research—exploring the link between financial education, literacy, and behaviors."

The Effect of Financial Literacy and Financial Education on Downstream Financial Behaviors

Source: Daniel Fernandes, John G. Lynch, Jr., and Richard G. Netemeyer

"Policymakers have embraced financial education as a necessary antidote to the increasing complexity of consumers’ financial decisions over the last generation. We conduct a meta-analysis of the effects of financial literacy and of financial education on financial behavior in 155 papers covering 188 prior studies. We find that interventions to improve financial literacy explain only 0.1% of the variance in financial behavior."

Students and Money: Financial Literacy Skills for the 21St Century

Source: Programme for International Student Assessment (PISA)

"This volume reports the results of the PISA 2012 financial literacy assessment, which was administered to approximately 29,000 students in 13 Organization for Economic Cooperation and Development countries and economies (Australia, the Flemish community of Belgium, the Czech Republic, Estonia, France, Israel, Italy, New Zealand, Poland, the Slovak Republic, Slovenia, Spain and the United States) and five partner countries and economies (Colombia, Croatia, Latvia, the Russian Federation and Shanghai-China), representing 40% of worl"

Videogames: A Promising Strategy for Improving Financial Literacy

Source: Financial Literacy Center

"Like many Americans, low-income employees often do not attend—or stay engaged in—financial education programs. The traditional approach to this problem has been to focus on the supply side: that is, to increase the availability of financial education programs. A promising new approach is to focus instead on the demand side by increasing the appetite for financial education through videogames."

Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances

Source: The Federal Reserve

"As a normal part of their financial lives, families must make a variety of decisions to select particular investments for any savings they may have, as well as to select the forms and terms of credit they may use. To the extent that families devote more or less attention to such activities or that they are better or worse informed, the wealth of otherwise comparable families may differ substantially over time."

The Financial Capability of Young Adults—A Generational View

Source: Financial Industry Regulatory Authority (FINRA)

"An examination of data from the FINRA Investor Education Foundation's National Financial Capability Study (State-by-State Survey) found that millennials are struggling financially. In particular, they exhibit a number of problematic financial behaviors, display low levels of financial literacy and express concerns about their debt."

Content-Based Teacher Professional Development Pilot Project

Source: National Endowment for Financial Education

"The pilot project was designed to provide content-based professional training for teachers so that they can be informed as learners. Measured outcomes showed that they not only made important changes to their personal finances, but they had an increased confidence in their ability to effectively teach the subject as well. This was made evident by the sharp increase in those who integrated financial education topics into their classroom instruction."

Understanding your FICO Score

Source: Fair Isaac Corporation (FICO)

"Your credit score influences the credit that's available to you and the terms (interest rate, etc.) that lenders offer you. It's a vital part of your credit health. This booklet can help you understand how credit scoring works. Understanding your FICO® Score can help you manage your credit health. By knowing how your credit risk is evaluated, you can take actions that may lower your credit risk—and thus raise your credit score—over time. A better FICO® Score means better financial options for you."

Promoting Financial Success in the United States: National Strategy for Financial Literacy

Source: Financial Literacy and Education Commission

"The recent economic crisis has highlighted how essential it is that individuals and families have the information, education, and tools that they need to make good financial decisions in an increasingly complex U.S. and global financial system. Indeed, as we have learned, the financial difficulties of individuals and families can dramatically affect the financial health of local communities and regional markets. The crisis has also illustrated that the financial well-being of individuals and families is fundamental to national financial stability, and that a lack
of financial literacy is one barrier that can lower standards of living and limit prosperity."

Pursuing the American Dream: Economic Mobility Across Generations

Source: The Pew Charitable Trusts

"Pursuing the American Dream looks closely at the mobility experiences of Americans on different rungs of the economic ladder, divided into five equal parts or quintiles. The study measures mobility in two ways. Absolute mobility measures whether a person has more or less income, earnings, or wealth than his or her parents did at the same age. Relative mobility measures a person's rank on the income, earnings, or wealth ladder compared to his or her parents' rank at the same age."

2013 Employee Wellness Financial Survey

Source: Pricewaterhouse Coopers

"While the percentage of employees finding it difficult to meet their household expenses on time each month has decreased since last year, nearly 40% continue to struggle. In addition, one in five employees is using credit cards to pay for monthly necessities they can't afford otherwise. Interestingly, those numbers are even greater at the higher income levels, which may be the result of people still suffering from having overextended themselves during more prosperous years."

Study on Investment Advisers and Broker-Dealers

Source: Securities and Exchange Commission

"Many retail investors and investor advocates submitted comments stating that retail investors do not understand the differences between investment advisers and broker-dealers or the standards of care applicable to broker-dealers and investment advisers. Many find the standards of care confusing, and are uncertain about the meaning of the various titles and designations used by investment advisers and broker-dealers. Many expect that both investment advisers and broker-dealers are obligated to act in the investors' best interests."

National Standards
 in K–12
 Personal Finance Education

Source: Jump$tart Coalition for Personal Financial Literacy

"Financially literate high school graduates…should have a general understanding of all key aspects of personal finance. These graduates will be confident in their ability to find and use the information required to meet specific personal finance challenges as they arise."

Savings Fitness: A Guide to Your Money and Your Financial Future

Source: US Department of Labor

"Many people mistakenly believe that Social Security will pay for all or most of their retirement needs. The fact is, since its inception, Social Security has provided a minimum foundation of protection. A comfortable retirement usually requires Social Security, employer-based retirement plan benefits, personal savings, and investments. In short, paying for the retirement you truly desire is ultimately your responsibility. You must take charge. You are the architect of your financial future."