Project Title

Does Financial Literacy Affect Direct Government Benefits Received?

Presentation Author(s) Information

Colin AdamsFollow

Faculty Mentor(s) Name(s)

Brooke Conaway

Abstract

The impending problem of Social Security has two clear solutions, to raise taxes or cut benefits. I look at a popular theory that increasing financial literacy is the best method to decrease government reliance. The benefits of financial literacy have led eight states to push to require a personal finance class in high school, most recently Florida in 2022. If significant, these classes could serve as an early substitute for the loss in benefits future generations may see. Using the National Longitudinal Survey of Youth 1979 (NLSY79), I create a financial literacy index based on five questions and measure four forms of government benefits (social security, unemployment, child care, and food stamps). Additionally, I include many control variables to ascertain the estimated effect. Together I use these to find the effect that financial literacy has on one’s government benefits received. Based on preliminary results, I measure no causal relationship between financial literacy and the government benefits one receives.

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Does Financial Literacy Affect Direct Government Benefits Received?

The impending problem of Social Security has two clear solutions, to raise taxes or cut benefits. I look at a popular theory that increasing financial literacy is the best method to decrease government reliance. The benefits of financial literacy have led eight states to push to require a personal finance class in high school, most recently Florida in 2022. If significant, these classes could serve as an early substitute for the loss in benefits future generations may see. Using the National Longitudinal Survey of Youth 1979 (NLSY79), I create a financial literacy index based on five questions and measure four forms of government benefits (social security, unemployment, child care, and food stamps). Additionally, I include many control variables to ascertain the estimated effect. Together I use these to find the effect that financial literacy has on one’s government benefits received. Based on preliminary results, I measure no causal relationship between financial literacy and the government benefits one receives.