December 2017
Summary: Employers routinely attempt to address deficiencies in financial decision making among their employees by deploying educational interventions that are brief and laden with motivational rhetoric. The object of the rhetorical elements is to compensate for brevity by making the material engaging, memorable, and actionable. Prior studies of these interventions evaluate their benefits using criteria that suffer from serious conceptual and practical limitations. In contrast, our research employs a novel method for assessing the quality of decision making that respects each consumer’s underlying tastes and focuses instead on mistakes arising from misconceptions about opportunities. We deploy this method to evaluate a pair of educational interventions targeting two critical topics in personal finance: compound interest and portfolio allocation. Both interventions appear to be effective based on conventional outcome measures….