Using High School Financial Literacy Education to Predict Future Income: A Story of Selection Bias

Abstract

I use data from the National Financial Capabilities Study for 2009 to 2015 to analyze the effect high school financial literacy education has on future income levels. I use Ordinary Least Squared regression to measure this relationship. Finding evidence of selection bias with a negative coefficient on the education participants, I control for it with a Heckman 2-step model. After adjusting for selection bias, I find participation in high school literacy education has no effect on future levels of income and is driven by confidence. Lower levels of confidence are correlated with higher participation in financial literacy education and lower levels of confidence are associated with lower incomes.