336 THE JOURNAL OF CONSUMER AFFAIRS

WILLIAM B. WALSTAD, KEN REBECK,

AND RICHARD A. MACDONALD
The Effects of Financial Education on the Financial
Knowledge of High School Students
This study investigated the effects of a financial education program
on high school students’ knowledge of personal finance. A compar-
ison of pretest and posttest scores achieved on a reliable and valid
thirty-item instrument suggested that the Financing Your Future cur-
riculum increased financial knowledge across many concepts. The
scores increased regardless of the course in which the curriculum was
used and across student characteristics. The assessment contributes
to the growing literature showing that a well-specified and properly
implemented program in financial education can positively and signif-
icantly influence the financial knowledge of high school students.

Interest in personal finance education in US schools has increased sig-

nificantly since the 1990s. From 1998 to 2009, the following changes
occurred: states with content standards for personal finance education in
the schools rose from twenty-one to forty-four, states requiring imple-
mentation of those standards increased from fourteen to thirty-four and
states requiring that a personal finance course or economics course with
personal finance content be taken before graduation from high school
grew from one to thirteen (CEE 2009). The Jump$tart Coalition for Per-
sonal Financial Literacy, formed in 1995, published the first national
content standards for personal financial education in 1998 (Jump$tart
Coalition for Personal Financial Literacy 2007). The organization also
sponsored national testing of high school students and has used the results
to call national attention to deficiencies in youth financial understanding
(e.g., Mandell 1998). In addition, changes in economic conditions since
the 1990s have led to more studies of adults’ problems with personal
finance (Braunstein and Welch 2002). These developments together with
reports of poor student test scores have reinforced the perceived need for
more financial education among youth (Bernanke 2006).
William B. Walstad (wwalstad1@unl.edu) is Professor of Economics at the University of
Nebraska-Lincoln. Ken Rebeck (kcrebeck@stcloudstate.edu) is Associate Professor of Economics,
and Richard A. MacDonald (macdonald@stcloudstate.edu) is Assistant Professor of Economics, both
at St. Cloud State University in Minnesota.

The Journal of Consumer Affairs, Vol. 44, No. 2, 2010

ISSN 0022-0078
Copyright 2010 by The American Council on Consumer Interests
SUMMER 2010 VOLUME 44, NUMBER 2 337

Published evidence of the effectiveness of precollege financial edu-

cation has been somewhat mixed. Some studies have questioned the
value of personal financial education in secondary schools. For example,
Mandell (2008), using the Jump$tart data that he collected from 2000
to 2006, found no evidence that students taking a money management
or personal finance course knew more about the subject than students
who had not taken such a course. Other studies have reported positive
effects on student knowledge or understanding of personal finance top-
ics and concepts based on education with specific financial curriculum
(e.g., Danes, Huddleston-Casas, and Boyce 1999; Harter and Harter 2009;
Varcoe et al. 2005). If states, school districts, or teachers want to allo-
cate more instructional time and resources to financial education in high
schools, more research is needed on its potential value to justify those
allocations. This study offers additional evidence that well-defined and
properly implemented financial education programs in high school can
increase students’ financial knowledge.
The study also seeks to address concerns, such as content specification,
instruction, measurement, research design and analysis, about research
protocols in financial education program evaluation (Fox, Bartholomae,
and Lee 2005; Lyons et al. 2006). The content for the DVD-based
curriculum used in this study, Financing Your Future (FYF) (CEE 2006),
is clearly described and specified so that different teachers provide the
same instruction to each student. After training, teachers are familiar
with the content and know how to teach it. The financial knowledge
test employed to assess student achievement was developed to be a
valid measure of knowledge of the content taught with the instructional
materials, and the scores were found to be reliable.

BACKGROUND AND PRIOR STUDIES

In response to the perceived need to improve financial literacy, a

wide range of private businesses, nonprofit organizations and government
agencies have developed financial education materials and programs (see
Fox, Bartholomae, and Lee 2005). Most have focused on adults and tar-
geted specific financial behaviors (Hilgert, Hogarth, and Beverly 2003).
However, some have focused on youth, as have some educational sys-
tems that have created state standards or curriculum mandates in personal
finance. For example, nonprofit organizations such as the National Foun-
dation for Financial Education, the Council for Economic Education and
Junior Achievement all have published curriculum materials and taken
other steps to improve personal finance education for precollege students
338 THE JOURNAL OF CONSUMER AFFAIRS

(see Lopez-Fernandini and Murrell 2008 for a description). As programs

and initiatives have expanded over the past decade, so has research on the
effectiveness of financial education. Given the extensive number of edu-
cational initiatives for adults, most research has focused on this segment
of the population (Martin 2007), but there has been evolving research in
recent years on financial education for youth (McCormick 2009).
An interesting line of national research has investigated the effects of
state mandates on financial literacy, which has generally been positive
and important. For example, a longitudinal study reported that adults
who had taken a personal finance course in high school saved a greater
proportion of their income when they were older (Bernheim, Garrett, and
Maki 2001). Another study showed that the characteristics of the state
mandate for schools mattered when investigating its effect on improving
financial knowledge scores (Tennyson and Nguyen 2001). Researchers
have found more specific state mandates for personal finance education
to have a more positive effect on student understanding than those more
broadly defined.
By contrast, another line of national research focused on the effects
of financial education on financial knowledge has drawn negative con-
clusions. One such study used Jump$tart test scores from 2000 through
2006 and reported that high school seniors who took a full-semester high
school course in personal finance had average scores that were no higher
than all seniors who took the test (Mandell 2008). These national test
data, however, are limited in their usefulness to evaluate the effectiveness
of financial education because of insufficient controls related to course
content, test measurement, teacher preparation and amount of instruc-
tion. Unlike most high school courses in mathematics or science, there
can be widespread national differences in the content of personal finance
courses, and these courses can give different emphases to each topic
even if they cover the same topics. The test also includes only thirty-
one knowledge items that may not closely match the content of personal
finance courses nationwide or give proper emphasis to the topics actually
taught in a course. Furthermore, the quality and amount of instruction
in a national sample can vary because teachers may not be well-trained
to teach the material or because of differences in the amount of instruc-
tion provided over a semester. A final problem is that the test data do
not measure the initial level of financial knowledge to assess changes
resulting from instruction in personal finance.
One means for overcoming these limitations is to focus the eval-
uation on a specific financial education curriculum so that the con-
tent is well-defined and standardized. One of the earlier and more
SUMMER 2010 VOLUME 44, NUMBER 2 339

comprehensive evaluation studies of this type focused on the High

School Financial Planning Program (HSFPP) (Danes, Huddleston-Casas,
and Boyce 1999). The 1998–1999 study found positive and significant
effects from the program on financial knowledge, financial behaviors and
financial self-efficacy among 4,107 students at the conclusion of class-
room instruction and three months later. The study was discussed in an
extensive review of program evaluations in financial education and the
authors of that review stated that, “Unfortunately, rigorous evaluations
and reporting of this sort is not part of many programs currently offered
in a school setting” (Fox, Bartholomae, and Lee 2005, p. 200).
The measure of financial knowledge used in the HSFPP study, and
a subsequent study of HSFPP (Danes and Haberman 2007) using data
collected in 2003–2004, was a subjective one and contained few items
because the emphasis in these studies was on behavior change. The
evaluation of student knowledge from the 1998–1999 sample asked
students to provide a self-assessment of their knowledge of three topics
(the cost of buying on credit; buying auto insurance; and investments)
on a posttest basis and then a retrospective pretest basis. The same
three survey items and testing procedures were used to collect data
from the 2003–2004 sample, but a fourth knowledge item was added on
“wants and needs difference.” These survey items offered useful insights
about changes in students’ perceptions of what they think they know
about the financial topics before and after exposure to the curriculum.
They were not designed, however, to provide test data on whether
students’ knowledge or understanding of the financial topics was correct
or incorrect, as would be shown by item responses on an achievement
test such as the Jump$tart survey or other similar achievement tests.
Another study evaluated the effectiveness of the MoneyTalks: Should
I Be Listening? curriculum for high school teens (Varcoe et al. 2005).
Pretest and posttest data were collected over a six-month period in
2002 from 114 students in four counties in California. In addition to
a self-perception measure of knowledge, this study included a financial
knowledge test composed of nineteen true–false questions that showed a
statistically significant increase from 52% correct on the pretest to 72%
correct on the posttest. The study, however, provided little information
on this test’s reliability or validity. In addition, the use of true–false
items rather than four-option multiple-choice items increased the level
of guessing. There also was no control group of students to use for
comparison purposes.
Several evaluation studies have investigated the effectiveness of
Financial Fitness for Life (FFL), a personal finance and economics
340 THE JOURNAL OF CONSUMER AFFAIRS

curriculum published by the Council for Economic Education for high

school students (grades 9–12) and lower grade levels (e.g., Morton and
Schug 2001). One of the advantages of this curriculum from an evaluation
perspective is that there are reliable and valid tests to measure student
achievement. For the high school level, Walstad and Rebeck (2005a)
developed a fifty-item multiple-choice test to assess high school student
financial knowledge based on the overall content and the five financial
education themes presented in the FFL curriculum. The reliability of
the tests was .86, which showed there was a high degree of internal
consistency among test items (Cronbach 1951). The content validity
for the test was based on the national standards in personal finance
published by the Jump$tart Coalition. The construct validity for the
test was evaluated by having high school teachers in three states—who
had been trained to use the FFL curriculum—administer the test to 524
students who were taught with the FFL curriculum, and to a control group
of 335 similar students in the same schools who did not receive this
instruction. The results showed that high school students receiving FFL
instruction with FFL-trained teachers achieved higher test scores than
the students in the control group. The positive results for FFL instruction
also held even after accounting for other factors such as gender, race and
ethnicity, income and type of community (Walstad and Rebeck 2005a).
Another extensive study assessed the effectiveness of the FFL cur-
riculum in high school, middle school and elementary school grades in
eastern Kentucky (Harter and Harter 2009). For the high school analysis,
the investigators used test items from the high school FFL test for three
FFL themes (saving, spending and credit, and money management) (Wal-
stad and Rebeck 2005a). They also recruited teachers to participate in a
workshop on use of FFL materials. In the semester prior to attending the
workshop, the recruited teachers posttested their students after instruction
using financial education materials that did not include FFL curriculum.
After attending the workshop and teaching the FFL curriculum, the teach-
ers pretested and posttested their students. The increases in the FFL test
means from pretest to posttest were significant and positive. An ordinary
least-squares (OLS) regression that controlled for general student ability,
grade level, gender and race showed a positive and significant improve-
ment in test scores for FFL students compared with students taught with
other financial education curricula.
One additional FFL study used 2004–2006 data from 84,582 students
who took a state-mandated end-of-course test in economics in Georgia
(Swinton et al. 2007). This study evaluated the contribution made to
student test scores from teacher participation in an FFL workshop. The
SUMMER 2010 VOLUME 44, NUMBER 2 341

study specified a fixed-effects regression to control for differences among

schools, and it also controlled for student characteristics such as gender,
race and ethnicity, disability and year of testing. The results showed that
high school students whose teachers had participated in an FFL workshop
(5.2% of the student sample) scored significantly higher on average on
the mandated economics test than did students of teachers who did not
receive such training. Although these positive findings provide insights
for assessing FFL teacher training, the study is not an evaluation of the
FFL curriculum or its effects on student learning. The knowledge test
also only focused on economics content, with only minimal personal
finance content included; thus, the test data do not permit an analysis
of what students know about personal finance overall or about different
topics in personal finance.
As is apparent from this focused review of prior studies, evaluating
the effectiveness of a financial education program for high school youth
requires careful attention to content, delivery, measurement, design and
analysis. First, there should be a clear definition of the personal finance
content so that students are taught the same content when instruction is
given. Second, teachers need to be trained to use the program materials
so they are familiar with the content and know best how to teach it.
Third, the knowledge outcomes (overall and for subscales) have to be
specified and measured with reliable and valid test instruments. Fourth,
data need to be collected on a pretest basis to control for starting levels
of financial knowledge and posttested at the end to assess changes in
financial understanding. Fifth, data must be rigorously analyzed using
an appropriate form of statistical analysis to determine whether there
are meaningful changes in outcomes while controlling for other factors.
These evaluation issues frame the context for this study. The current
study contributes to the broader literature by describing a controlled and
systematic assessment that targets its evaluation work at the fourth tier
(progress-toward-objectives) and fifth tier (program impact) of Jacobs’
(1988) five-tier model of evaluation.

FINANCIAL INSTRUCTION AND STUDY DESIGN

FYF is a personal finance program on DVD for high school teachers

to use with their students (CEE 2006). The program contains five video
segments on the DVD. The first video introduces students to basic
vocabulary and key concepts in personal finance such as saving, wealth
building and money management. The second video covers trade-offs
and opportunity costs related to financial decision making, and earning
342 THE JOURNAL OF CONSUMER AFFAIRS

an income. The third explains the importance of banking relationships

and discusses banking and checking practices. The fourth explains topics
such as credit, debt, annual percentage rate (APR), and credit scores.
The fifth video focuses on financial budgeting, saving, investing and risk
tolerance. With each video there are three printed lessons that teachers
can use to reinforce the financial concepts in the video. These lessons
contain written outlines for teachers to present ideas and concepts, and
instructional activities and assignments for students to complete.
A primary purpose for this study was to assess whether FYF mate-
rials increased student knowledge of personal finance. To achieve that
objective, the study used a quasi-experimental design with a treatment
group and a control group (Shadish, Cook, and Campbell 2002). The
design was intended to address concerns about the quality of evaluation
of financial education programs (Fox, Bartholomae, and Lee 2005). The
treatment group was senior high school students who viewed the FYF
videos and used the FYF lesson materials for approximately six hours of
total instruction. This instruction was spread over a two- to four-week
period that varied across teachers, depending on the length of class ses-
sions and daily teaching schedules. The control group was similar high
school students who received no FYF instruction during the period of
the FYF assessment. Test and survey data were collected from students
prior to FYF instruction and at the completion of FYF instruction. The
control students also were pretested and posttested at the same time as
the FYF students.1
FYF was developed with the expectation that teachers would be trained
to use both the DVDs and accompanying classroom lessons. In the deliv-
ery system created by the Council for Economic Education, this teacher
training was supplied in workshops offered by its national network of
affiliated state councils or centers for economic education. The FYF
training was conducted by council or center staff members, who typically
serve on the faculty at a college or university and have special expertise
in educating teachers about the subject content and effective pedagogy.
The FYF teachers who tested their students received about three to four
hours of training during Fall 2006. The fifteen teachers who volunteered

1. Teachers for both the FYF and control groups asked for the full cooperation of students for the
testing and emphasized the importance of the project. The test instrument was given in combination
with other survey questions and was not designed to be used for grading, nor were answers to the
test questions given to teachers so they could grade the test. No reports came from the teachers
that the test counted for students’ grades or indicated that student groups responded differently to
testing. The pretest means for both groups also were essentially equivalent (see Table 3) indicating
that there was no apparent difference in testing response by group.
SUMMER 2010 VOLUME 44, NUMBER 2 343

and were selected for the study came from four states—New York (three),
Minnesota (five), Texas (three) and Maryland (four). After their training,
they provided FYF instruction in forty classes containing 913 students.
This instruction was given in late fall of 2006 or winter of 2007. In
addition, three of these teachers, one each in New York, Minnesota and
Texas, arranged to have the assessment instruments administered on a
pretest and posttest basis to six classes of similar students. The 153
students in these six classes were the control group. These classes were
either taught by these three teachers or they were taught by one of their
colleagues at the same school.
As with most pretest and posttest studies, there was incomplete data
from some students. The likely reasons included illnesses or other reasons
for missing school on a posttest day, or students moving out of the class
or school during a semester. In addition, many students did not provide
the complete or correct information to match their pretest data with their
posttest data. The attrition from the pretest sample to a matched sample
(pretest and posttest) did not appear to affect the results in any systematic
way. The results for this study are based on a sample of eight hundred
students (673 FYF and 127 controls) who took both the pretest and
posttest instruments and provided background data.

SAMPLE AND MEASURES

Table 1 presents the distribution of the matched sample of 673 FYF

students and 127 control students across course and personal characteris-
tics. About 67% of the FYF students were taking economics, compared
with 51% of the control students. The other 49% of the control students
were in a US government or world history course. About half of the sam-
ple was female (52% of the FYF group and 48% of the control group).
The FYF sample included a slightly greater percentage of seniors (82%)
than did the control sample (79%). A majority (67%) of the control stu-
dents planned to attend a four-year university after graduation, compared
with 58% of the FYF sample. One likely reason the control group showed
more interest in future education was that one of the control classes was
actually a “college in the high schools” economics course. Each group
was distributed similarly across employment history. Between 40% and
50% of each sample were from Minnesota. Maryland provided the small-
est FYF group (8%) and had no control students. The Maryland students
were the only students taking a personal finance course.
A financial knowledge test was constructed to measure student under-
standing of personal finance as presented in the FYF videos and lesson
344 THE JOURNAL OF CONSUMER AFFAIRS

TABLE 1
FYF Sample Characteristics (n = 800)a

FYF (n = 673) Control (n = 127)

Course
Personal finance 8.2 —
Economics 66.7 51.2b
Accounting; business/personal law 11.7 —
US government or world history 11.6 48.8
English as second language for employment 1.8 —
Gender
Male 47.7 52.0
Female 52.3 48.0
Class level
Sophomore 2.2 21.3
Junior 15.0 —
Senior 82.8 78.7
Plans after high school
Work, no education 2.8 3.9
Attend two-year college 25.3 17.3
Attend four-year university 57.7 66.9
Other education/training 7.0 6.3
Undecided 7.3 5.5
Employment history
Work summers and during school 56.5 44.1
Work during summers, not school 14.6 13.4
Work during school, not summers 4.5 4.7
Worked in the past, not currently 8.9 11.8
Never formally employed 15.6 26.0
Whose credit card do you use?
My own 10.0 15.7
My parents’ 13.4 16.5
Both my own and my parents’ 4.0 3.1
None, I do not use a credit card 72.7 64.6
State
Maryland 8.2 —
Minnesota 48.1 44.9
New York 17.4 26.8
Texas 26.3 28.3
a Percentage may not sum to hundred due to missing responses.
b One economics class in the control group was a “College in the High Schools” course.

materials. The thirty multiple-choice items on the test came from two
sources, one independent of FYF and one dependent on FYF. The inde-
pendent items came from a personal finance test that accompanies the
FFL curriculum and which Walstad and Rebeck (2005a, 2005b) have
shown to be a reliable and valid measure of personal financial under-
standing. Seventeen items were selected from this external test based on
SUMMER 2010 VOLUME 44, NUMBER 2 345

their close match to the personal finance content of the FYF materials.
An additional thirteen items were written to cover other FYF content for
which there were no published test items.2 The alpha reliability of the test
was .85, which shows that there is a high degree of internal consistency
among items (Cronbach 1951).
The content validity of the FYF knowledge test is evident in Table 2,
which shows the distribution of the thirty multiple-choice items across
the fifteen FYF lessons. Copyright restrictions do not permit publishing
the test items, but they are briefly described in the lower half of Table 2.
In addition, the test contained items written at different cognitive levels.
Twenty-two items focused on testing for knowledge or comprehension
of ideas or concepts in personal finance and eight items required
application of knowledge to problems or situations. Each of the thirty
items discriminated between students who knew more and those who
knew less about the content of the test.3

RESULTS

Table 3 reports the percentage correct scores achieved by the 673 stu-
dents in the FYF group before and after implementation of the FYF
program. Scores achieved by the 127 control students taking the exam
also are reported. The students in the FYF group had a mean score of
49.2% correct on the pretest (SD = 15.1). The mean score for the control
students was 49.5% correct (SD = 16.5). The difference was not statisti-
cally significant (t-value = 0.195) and indicated that the two groups had
relatively the same level of financial knowledge before instruction began
for the FYF students.
After instruction, FYF students achieved a mean score of 68.9% cor-
rect (SD = 18.1), an average gain of 19.7 percentage points. A pairwise
statistical test of the equality of the pretest and posttest scores for the
FYF group rejected the null hypothesis that the true parameters were
equal (t-value = 30.6). Control students achieved a mean score of 50.5%
(SD = 17.6), a gain of 1 percentage point that was not statistically signif-
icant (t-value = 0.94). The nearly identical mean scores achieved at the

2. The FYF test items that were taken from the FFL senior high test were 1, 2, 4, 6, 7, 8, 9,
10, 12, 16, 20, 23, 25, 26, 29 and 30 (Walstad and Rebeck 2005a). Item 13 came from the middle
school FFL test (Walstad and Rebeck 2005b). Items 3, 5, 11, 14, 15, 17, 18, 19, 21, 22, 24, 27 and
28 were newly written for the FYF test.
3. Eleven items had point-biserial correlation greater than .4, and fourteen other items had
point-biserial correlations ranging from .3 to .4. None of the items had negative point-biserial
correlations.
346 THE JOURNAL OF CONSUMER AFFAIRS

TABLE 2
FYF Knowledge Test: Content and Cognitive Coverage

Cognitive Level
Knowledge or
FYF Lessons Comprehension Application

Video 1
1.1 What is a financial life? 1, 20, 26
1.2 Setting financial goals 6 30
1.3 Spend less than you earn 7
Video 2
2.1 Why can’t I have everything I want? 9, 18
2.2 Decisions about my human capital 23, 28 13
2.3 Learning is a lifetime investment 10
Video 3
3.1 Why keep your money in a bank? 11, 27 12
3.2 The costs and benefits of being banked 4, 8
3.3 Check, charge, debit card? 29
Video 4
4.1 Make credit work for you 15 14
4.2 Credit savvy 24 17
4.3 The most important grade you will ever earn 3, 19
Video 5
5.1 Why should I pay myself first? 2, 22 21
5.2 How to create a financial plan 25
5.3 Risks and rewards 5, 16
FYF Test Item Content
1. Net worth 16. Risk and reward
2. Saving importance 17. Credit card charges
3. Interest rate and risk 18. Decision making
4. Financial institutions 19. FICO score
5. Liquidity risk 20. Education and wealth
6. Financial decisions 21. Rule of 72
7. Saving and age 22. Compound interest
8. Debit card 23. Wages and markets
9. Human capital 24. Revolving credit
10. Education and income 25. Net income
11. Interest 26. Saving and finances
12. FDIC insurance 27. Banks and lending
13. Wages and labor demand 28. Occupation and income
14. Income and debt level 29. Credit card function
15. Annual percentage rate 30. Financial goals

time of the pretest and posttest for the control group suggest that learning
due to taking the pretest was unlikely to affect achievement in the study.
Comparison of the total scores achieved by the FYF group at the time
of the pretest and posttest provided strong evidence of the curriculum’s
SUMMER 2010 VOLUME 44, NUMBER 2 347

TABLE 3
FYF Knowledge Test Pretest and Posttest Scores: FYF and Control

FYF Students (n = 673) Control Students (n = 127)

Pretest Posttest Difference Pretest Posttest Difference

Total Score (α = .85) 49.2 68.9 19.7∗∗ 49.5 50.5 1.0

(15.1) (18.1) (16.5) (17.6)
Videoa
1 (α = .62) 52.6 73.1 20.5∗∗ 52.6 54.5 1.9
(24.9) (25.2) (26.2) (27.9)
2 (α = .53) 45.8 66.7 20.9∗∗ 48.8 49.6 0.8
(21.3) (24.2) (21.74) (23.5)
3 (α = .63) 64.4 80.6 16.2∗∗ 60.5 63.0 2.5
(25.3) (22.2) (28.47) (26.8)
4 (α = .43) 37.9 61.9 24.0∗∗ 38.6 40.4 1.8
(20.3) (22.9) (22.0) (22.0)
5 (α = .45) 45.3 62.1 16.8∗∗ 47.0 45.1 −1.9
(21.5) (23.6) (21.9) (22.2)
a See Table 2 for the contents of the FYF videos. Sample standard deviations in parentheses.
∗∗ p < .01, two-tailed paired-samples t-test.

ability to influence students’ understanding of the material. It is possible,

however, that this estimated increase in knowledge might merely reflect
the curriculum’s effectiveness in increasing understanding of some con-
cepts covered, while having no effect on the understanding of others.
To further explore the influence of the FYF curriculum, subscores were
calculated for the five videos in the FYF curriculum. These subscores
were calculated by summing the number of correct responses to the six
items that covered the content of each of the five videos. The reliability
estimates for these subscores were acceptable but lower than those for
the entire test primarily because there were fewer items (six compared
to thirty) for each subscore.4
Data for the subscores in Table 3 show the improvement in FYF
students’ financial knowledge resulted from increases across the concepts
in all five FYF videos. Each difference was statistically significant at
the .01 level. By comparison, control students showed no statistically
significant average differences in pretest and posttest scores for any of
the five videos. The average increase in FYF scores for the entire thirty-
item test achieved by the treatment group was 19.7 percentage points.
Three of the FYF five subscores showed an average increase that was

4. For example, the reliability estimates for the FYF subscales (alphas: .43 to .62) are comparable
with or higher than the reliability estimates for the subscales on the 2000 Jump$tart knowledge test
(alphas: .23 to .59) (see Lucey 2005).
348 THE JOURNAL OF CONSUMER AFFAIRS

somewhat greater than for the overall tests (20.5, 20.9 and 24.0) and two
subscores showed an increase that was somewhat less than the overall test
(16.2 and 16.8). Video 4 had the highest gains and it covered concepts
involving the use of credit. The lowest gains were found in Video 3,
which covered concepts related to banking.
To further explore the effect of the FYF curriculum on students’
knowledge across concepts, we compared the pretest and posttest item
percent correct for each of the thirty items. For the sake of parsimony,
we only summarize the results instead of reporting them in a table. For
the FYF group, there was a statistically significant increase in the percent
correct from pretest to posttest for twenty-nine of the thirty items, with
twenty-eight significantly different from zero at the .01 level and one at
the .05 level.5 By contrast, the control group had a statistically signifi-
cant change on only two items, one of which was positive and the other
negative. The FYF-item results reinforced the findings from the total and
subscore analysis and showed that FYF instruction increased students’
knowledge of almost all the concepts covered on the thirty-item test.
Although the score and item analysis indicated that FYF instruction
contributed meaningfully to understanding personal finance, an argument
could be made that the significant improvement in scores from pretest to
posttest might be only because of increases within some courses but not
others, or only for students with certain characteristics. To investigate
this issue, pretest and posttest average percentages were calculated and
compared using a pairwise t-test across course and student characteristics.
Table 4 presents the average pretest and posttest percentages and t-values
for the FYF-matched sample of students.
The increases in the average percentages from pretest to posttest were
statistically significant across each course type using the FYF materials.
The largest average gain of 22.55 percentage points was achieved in the
economics course, which was not unexpected because economists and
economics educators developed the FYF materials primarily for use in
economics courses. The results, however, also showed that FYF instruc-
tion still can be beneficial when used in courses with a wide variety of
subject content.
The achievement gains were statistically significant for both males and
females (19.4 and 19.9, respectively). The starting pretest percentages

5. The one exception was a multiple-choice item (#10) asking students to correctly identify lower
future earnings as a likely consequence of dropping out of high school. This item was the easiest
one on the test (81.1% correct on the pretest), which limited its potential to measure the change in
knowledge.
SUMMER 2010 VOLUME 44, NUMBER 2 349

TABLE 4
Percentage Correct on FYF Knowledge Test by FYF Student Characteristics (n = 673)

Pretest (%) Posttest (%) Change n t-Value

Course
Personal finance 52.36 61.03 8.67 55 3.90
Economics 51.35 73.90 22.55 449 32.71
Accounting; business/personal law 48.44 67.76 19.32 79 7.56
US government or world history 36.71 48.93 12.22 78 7.18
English as second language for employment 41.11 54.44 13.33 12 2.30
Gender
Male 49.41 68.84 19.43 321 19.75
Female 49.03 68.93 19.90 352 23.57
Class level
Sophomore 40.89 63.33 22.44 15 5.40
Junior 51.06 69.31 18.25 101 10.95
Senior 49.10 68.96 19.86 557 28.02
Plans after high school
Work, no education 44.04 64.91 20.87 19 4.16
Attend two-year college 45.20 66.20 21.00 170 17.56
Attend four-year university 51.77 71.31 19.54 388 24.44
Other education/training 45.82 64.89 19.07 47 5.56
Undecided 48.16 64.42 16.26 49 6.32
Employment history
Work summers and during school 49.89 71.14 21.25 380 24.76
Work during summers, not school 48.91 65.17 16.26 98 9.63
Work during school, not summers 47.11 65.89 18.78 30 5.42
Worked in the past, not currently 48.94 64.17 15.23 60 6.87
Never formally employed 47.78 67.75 19.97 105 13.68
Whose credit card do you use?
My own 45.22 68.01 22.79 67 9.13
My parents’ 47.89 63.11 15.22 90 8.84
Both my own and my parents’ 47.65 63.58 15.93 27 5.01
None, I do not use a credit card 50.09 70.36 20.27 489 27.89
State
Maryland 52.36 61.03 8.67 55 3.90
Minnesota 52.74 73.56 20.82 324 30.21
New York 40.60 50.91 10.31 117 6.15
Texas 47.48 68.89 21.41 177 19.97

were almost identical for both groups as were the posttest values. The
great similarities in pretest and posttest scores indicate that FYF test
and instruction is probably not subject to conditions that produce gender
differences in financial knowledge outcomes.6
There was a statistically significant improvement in financial knowl-
edge scores across sophomores, juniors and seniors. The differences in

6. Other studies of high school curricula in financial education have reported gender differences
in financial knowledge (Danes and Haberman 2007; Varcoe et al. 2005).
350 THE JOURNAL OF CONSUMER AFFAIRS

gains within this category were likely due to differences in sample size.
The gains for sophomores were the largest (22.4), but the sample was
small and probably a more select group of students than the other groups.
However, the gains for juniors and seniors, which were the two largest
groups, were more similar, with seniors showing slightly larger gains
(19.9) than juniors (18.3)—as might be expected because of their greater
maturity.
Students also were asked to state their plans for education and work
after high school. The statistically significant gains (19.1 to 21.0) in
financial knowledge were similar for those groups of students with some
type of stated educational or work plans after high school. The gains
(16.3) were lower, however, for students who were undecided about their
future plans, presumably reflecting some lack of interest in academics or
work preparation in high school.
Students were asked about their employment during high school.
Substantial increases in test scores were found across all employment
categories. The gains varied from 15.2 for students who worked in the
past, but were not currently working, to 21.3 for students who worked
summers and during the school year. Employment was not a critical
factor for gains in test scores because even students who had never been
employed formally had relatively high gains (20.0).
Both those students who had used either their own or a parent’s credit
card and those who had not used a credit card exhibited large gains in
understanding. The largest increase in scores was among students who
had their own credit cards (22.8), perhaps because they had a reason
to be more interested in personal finance content. This gain, however,
was not much larger than for students who reported that they did not
use credit cards (20.3). Students with the smallest gains were those who
used their parents’ credit cards (15.2) or some combination of their own
and parents’ credit cards (15.9).
Finally, FYF students in all four states showed statistically significant
gains in financial knowledge scores. The state gains were largest and
most similar in Texas (21.4) and Minnesota (20.8) and smaller in New
York (10.3) and Maryland (8.7). It should be noted that the Maryland
sample contained only students in a personal finance course, and hence
the test scores for this state and the personal finance course category
were the same.
The analysis so far has focused on comparison of pretest and posttest
scores for financial understanding to detect significant differences in
mean percentages. The results from the percentage score analysis indi-
cated there were positive and significant effects of financial education on
SUMMER 2010 VOLUME 44, NUMBER 2 351

students’ financial knowledge. Although Table 1 presents similarities in

the two groups, differences also exist and could potentially explain dif-
ferences in the outcomes. Accordingly, a regression model was specified
and estimated to investigate the effect of the FYF curriculum while con-
trolling for course type, student characteristics and teacher effects that
were not equally distributed across the FYF and control groups.
For this analysis, the following linear model was estimated.

2 
6
Yit = αt + βj C(j )it + βk S(k )it + uit . (1)
j =1 k =1

The dependent variable, Yit , is the posttest financial knowledge score

for student i of teacher t. Bosshardt and Watts (1990) described the
importance of controlling for differences across teachers when estimating
the influence of student and course factors on precollege student
achievement in economics, and included a teacher fixed effect in their
regression analysis. We also included a fixed effect for each teacher (αt )
to control for unobserved differences across teachers.
The independent variables included two course-level factors (C(1) and
C(2)) and six student-level factors (S(1) through S(6)). The variable C(1),
which represents the focus of our study, is a dummy variable for finan-
cial education. A “1” for this variable indicated that the student was in
the treatment group—the student participated in a course that utilized the
FYF curriculum. If financial education, specifically the FYF curriculum,
effectively improves financial knowledge gains relative to the control
group (C(1) = 0), the estimated coefficient will be positive. The variable
C(2) controlled for course type, with a “1” indicating that the student’s
course was either economics or personal finance. It was expected that stu-
dents in these courses were more likely to cover the concepts included
in the test instrument, regardless of whether the course utilized the FYF
curriculum.
The student’s pretest knowledge score (S(1)) captured the initial
level of student knowledge, and thus the coefficients on the remaining
independent variables represented the effects of these variables on the
change in knowledge from pretest to posttest. Student characteristics
(S(2) through S(6)) were included to control for student-level factors that
might influence changes in financial knowledge. Several studies show that
a student’s gender influences financial knowledge (Danes and Haberman
2007; Varcoe et al. 2005), so gender (S(2); 1 = female) was included
in the equation. Students with greater academic ability and who devote
more effort to studying are likely to learn more, so a student’s educational
352 THE JOURNAL OF CONSUMER AFFAIRS

plans (S(4); 1 = four-year college, 0 otherwise) was included as a

proxy for academic ability and effort. Students expected to have more
experience with financial concepts outside of the classroom and thus
more opportunities to assimilate financial literacy also might possess a
stronger basis upon which to learn new financial concepts. A student’s
class level (S(3); 1 = senior, 0 otherwise) was a proxy for age and thus
extracurricular learning opportunities (as well as a proxy for maturity,
also expected to have a positive effect on learning). A student’s work
experience (S(5); 1 = never worked) and credit card use (S(6); 1 =
never used a credit card) also were included to capture extracurricular
experiences that might be associated with financial knowledge.
The main purpose of the study was to estimate the effect of financial
education on financial knowledge, so the discussion of the results will
primarily focus on the estimated coefficients for financial education in
the three regressions described below. The first column of values in
Table 5 reports the regression results for the unrestricted sample (eight
hundred students and fifteen teachers). It shows that the explanatory

TABLE 5
Fixed-Effects Regression Results

(1) Unrestricted (2) Restricted (3) Economics

Variable (n = 800) (n = 308) (n = 514)

Dependent variable = financial knowledge posttest score

Financial education (1 = FYF student) 15.932∗∗ 15.513∗∗ 21.297∗∗
(1.653) (1.952) (1.943)
Course (1 = economics or personal finance) 8.300∗ 3.945
(3.573) (6.517) —
Financial knowledge pretest score 0.467∗∗ 0.406∗∗ 0.492∗∗
(0.034) (0.072) (0.042)
Gender (1 = female) −1.722 −1.970 −2.155∗
(0.925) (1.687) (1.094)
Educational plans (1 = four-year college) 3.355∗∗ 3.761∗ 3.347∗∗
(0.995) (1.754) (1.198)
Class level (1 = senior) −0.857 4.072 −4.552
(1.894) (5.629) (3.092)
Work (1 = never worked) 0.373 −0.773 1.182
(1.242) (2.060) (1.448)
Credit card use (1 = no) 1.530 2.111 1.408
(1.052) (1.925) (1.285)
Constant 38.039 38.153 42.982

Adjusted R 2 .430 .425 .351

F 43.34∗∗ 16.89∗∗ 36.04∗∗

Note: Standard errors in parentheses.

∗ p < .05; ∗∗ p < .01, two-tailed test. The constant reflects the average value of the fixed effects.
SUMMER 2010 VOLUME 44, NUMBER 2 353

variables explained 43% of the variation in the dependent variable. After

accounting for the effect of differences among teachers, pretest scores
and other student characteristics, FYF students gained 15.93 percentage
points from pretest to posttest relative to control students, an effect that
was statistically significant at the .01 level.7
Although the research design called for treatment and control students
to be drawn from the same general population of students, one limitation
of the data set was that not all teachers taught both a treatment and
control group. This factor raised an issue about whether there was a
systematic difference in treatment and control teachers who accounted
for the posttest differences in the financial knowledge scores of FYF and
control students. To investigate this issue, we restricted the sample to
students with teachers who taught both a treatment and control group.
This restriction reduced the student sample to 308 students who were
taught by three teachers. The values in the second column of Table 5
present these results. Again, the estimated effect from instruction with
the FYF curriculum (β2 = 15.513) remained statistically significant at the
.01 level. The size of the coefficient also was essentially the same as the
coefficient for FYF when estimated with the full sample of eight hundred
students who were taught by fifteen teachers. These results indicated that
differential participation of teachers in treatment and control groups was
unlikely to significantly influence posttest achievement scores.
Another finding is worth noting. The regression results from the full
sample showed that students in economics courses had larger increases
in measured gains in financial knowledge relative to students in other
courses after controlling for other factors.8 This premium may arise
because students who take such courses may be of higher general ability
and thus better prepared to understand personal finance content or it may
be that the teachers of such courses are better able to provide instruction
because they already teach similar content.
Finally, it could be argued that the composition of the FYF and control
students in different courses have produced the positive gains for FYF

7. Alternative specifications of this equation that used the posttest minus the pretest as the
dependent variable suggest that the drop in the estimated gain found in test score means (Table 3)
from 19.7 percentage points for FYF students to 15.9 percentage points in the regression was from
taking into account the pretest level of knowledge in the regression equations. In fact, when the
pretest was removed from that equation, the estimated coefficient on the FYF variable was 20.2,
with or without the inclusion of the other explanatory variables.
8. The dummy variable included both students in economics and personal finance courses, but
few students in the entire sample (only fifty-five) took a personal finance course, so the dummy
effect largely reflected taking an economics course. Further analysis was conducted with only FYF
and control students taking an economics course (n = 514), as shown in column 3 of Table 5.
354 THE JOURNAL OF CONSUMER AFFAIRS

students over control students because FYF materials were used in some
courses that had no control counterparts. This course issue was addressed
with the results presented in column 3 of Table 5. In this case, the
regression analysis was based on a restricted sample of 514 students
taking only an economics course to test the robustness of the estimated
value of the FYF education when isolating its effect within one course
type. Six teachers taught this restricted sample of students. This same
course analysis was possible because the largest number of students tested
had taken an economics course, which was the main course target for the
FYF curriculum. For the economics students, the estimated contribution
to financial knowledge was 21.3 percentage points, which was highly
significant at the .01 level.

CONCLUSIONS

Instruction in personal finance in high school has the potential to

improve the financial knowledge of high school students, but questions
have been raised in some studies about whether financial education does
have a positive effect on high school students’ financial knowledge.
This study investigated this relationship under research conditions that
controlled for consistency in the content coverage for financial education,
assured that the personal finance instruction was provided by well-
trained teachers, used a financial education test aligned with what
was being taught and measured the initial level of understanding of
personal finance to capture the improvement in financial knowledge. The
regression analysis also accounted for the effects of a wide assortment
of student characteristics that may influence financial knowledge. These
practices are consistent with recommendations for a more systematic and
comprehensive approach to evaluation (Fox, Bartholomae, and Lee 2005;
Lyons et al. 2006).
The study, for example, devoted a substantial effort to the issue of
measurement because the quality of the test measure has an important
influence on the results and how they are interpreted. The researchers
constructed an achievement test that was a reliable and valid instrument
to assess student knowledge of personal finance taught with the FYF
curriculum. In addition, the instrument was valuable for assessing
student responses on subcategories of personal finance content. This
measurement work would be considered an important part of the
fourth tier (progress-toward-objectives) in Jacobs’ model of evaluation
described in Fox, Bartholomae, and Lee (2005, p. 213).
SUMMER 2010 VOLUME 44, NUMBER 2 355

Another feature of the evaluation is its use of a quasi-experimental

design with a treatment and control group and a pretest and posttest
for each group (Shadish, Cook, and Campbell 2002). A comparison of
the two groups showed that the control group of students was quite
similar to the FYF treatment group of students because both groups
were drawn from the same or very similar locations and conditions. The
major advantage of a control group of students who did not receive
FYF instruction was that it served as a baseline to assess whether
FYF instruction improves student knowledge of personal finance. The
inclusion of a control group is important because it enables a study to
reach the fifth tier (program impact) in Jacobs’ model of evaluation, but
is rarely used in program evaluations in financial education according to
Fox, Bartholomae, and Lee (2005, pp. 207–208).
The fixed-effect regression results showed that financial education does
make a positive and important contribution to a high school student’s
knowledge of personal finance after controlling for other explanatory
factors. These factors included ones such as type of high school course,
gender, educational level, educational or work plans after high school,
work history during high school, credit card use and teacher effects.
The analysis also revealed that financial education can improve financial
knowledge across a range of different courses taught in the school
curriculum. Positive and significant effects from FYF instruction from
pretest to posttest also were found across student characteristics. These
general conclusions, however, about the effectiveness of FYF instruction
in improving financial knowledge only apply to students who had just
received such instruction. It is not known if students retain this increase
in knowledge after the program ends and over time.
One final point should be kept in mind. These results apply to high
school instruction in financial education, which is designed to develop
general knowledge and understanding of various topics in personal
finance. Although some of this financial education may have immediate
application to issues or concerns of youth, the major purpose of most of
this financial education is to build a foundation for greater understanding
or an orientation to the financial world that will be useful at a later point
in life after high school graduation. This financial education for youth,
therefore, often differs from the financial education for adults, which is
primarily designed to address an immediate financial problem or decision
related to a particular financial matter. For these reasons, caution should
be exercised when extrapolating from these findings for the effects of
financial education of youth to the financial education of adults.
356 THE JOURNAL OF CONSUMER AFFAIRS

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