Do Financial Education Interventions for Women from Poor Households Impact Their Financial Behaviors? Experimental Evidence from India

One-day financial education training programs may be cost-effective interventions for improving the financial behaviors of women from poor households, such as in increasing their likelihood to have personal savings.

• The “Rule of Thumb” one-day intervention increased participants’ savings on average by 7%, which is comparable to traditional classroom-style financial education programs, which have been shown to increase participants’ savings by 6%.
• People who received this training on average saved 92 INR (1.42 USD) more than people who did not receive the training three months post intervention.
  • The training itself cost 50 INR (0.76 USD) per participant, making this a very cost-effective intervention—in terms of its cost versus its benefit, and in terms of its effectiveness versus the effectiveness of more-costly traditional programs.
• The training also significantly impacted the mechanisms that people used to regulate their finances.
  • Those who received the training were 15.77 times more likely to maintain a written personal budget than those who did not receive the training.
  • Their perception of their likelihood of following through on their budget was not significantly different from people who did not participate in the training.
• People’s likelihood to be interested in financial matters was not impacted by the training.

This study investigated the effects of a one-day financial education program on 1,281 women from poor households in urban India. The experiment was facilitated by Plan India, a non-governmental organization that works with the poor in developing nations across the globe. The study focused on Mangolpuri and Sultanpuri, which are some of the oldest and largest resettlement areas in West Delhi, with high levels of economic hardship and low levels of governmental policy intervention. The study intervention provided “Rule of Thumb” training to participants, giving them short guidelines for how to be fiscally responsible, instead of the more detailed, traditional classroom-style teaching of financial literacy. The groups consisted of 17 women on average, and 78 such groups were formed between July and September of 2014 for the purposes of the study. By random assignment, 41 groups were assigned to receive the Rule of Thumb intervention, and 37 groups received the control, which was a training that lacked detailed financial education content. In order to be an ethical trial, the 37 control groups were later given  the same financial training after study completion. The participants were observed from November 2014 to July 2015. The researchers hypothesized that had the study continued to observe the participants for a longer period of time, the effects that they received from financial education could accumulate and become even larger. They also suggested that the experiment should be repeated in other settings, locations, and communities.