Edward M Gramlich: Economic and financial education
Remarks by Mr Edward M Gramlich, Member of the Board of Governors of the US Federal Reserve
System, at the Georgia Summit on Economic and Financial Education, Federal Reserve Bank of
Atlanta, Atlanta, 4 September 2003.
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Thank you for inviting me to speak at today's conference. For many years, the Federal Reserve has
played an active role in furthering economic education among youth. Recently, we expanded our
involvement by promoting the importance of personal financial education for all demographic and
social groups. In May, we launched a national campaign that included a public service announcement
featuring Chairman Greenspan. Our goal is to increase public awareness of the value of effective
personal financial management in home ownership, higher education, retirement security, and overall
economic well-being.
While some may not consider the topic of economic and financial education to lie within the purview of
a central bank, it is in fact quite consistent with the Federal Reserve's interests in many areas -
economic policy, banking supervision, consumer regulation, public information, and community affairs.
Hence, we appreciate your efforts in furthering education on these topics and applaud your interest in
strengthening the effectiveness of your programs.
As you are well aware, a solid understanding of economics and finance is relevant to both individual
financial success and to the proper functioning of markets. Consumers who are familiar with basic
economic principles, who are able to analyze personal financial scenarios and options, and who have
access to pertinent financial information are important components to the success of our free market
system. With these tools - knowledge, analytical skills, and access to information - consumers are able
to make more effective financial decisions. This furthers market efficiency by creating demand for
products that are more responsive to consumer needs.
As providers of economic and financial education, you are quite familiar with the difficulties of choosing
among the myriad products and services offered by our financial services sector. Financial markets
are becoming steadily more sophisticated and expansive. Consumers are required to assume ever
greater responsibility for managing their personal finances, such as their employer-sponsored
retirement savings accounts. The result is that the need for financial education is also growing, and is
indeed experiencing an unprecedented level of attention and funding from a broad base of supporters,
ranging from financial institutions to employers to faith-based organizations.
With the growth in financial education programs has come an increased interest in measuring the
effectiveness of such programs. Performance and outcome measurement should be the way to justify
continued support for any program. Further, the data collected for the program evaluation process can
identify "best practices" which can be replicated on a broad scale to increase the reach and
effectiveness of successful programs. But unlike readily quantifiable outcome measures such as
business profits, a bright-line test of success is not always available for financial education programs.
There is often no single outcome that conveys success, and the determinants of achievement may
depend on factors that vary from one individual to the next. Further, these programs may not realize a
return on their investment for months, or even years.
Given the importance of evaluating a program's success, leaders of various economic and financial
education programs have been exploring ways to measure the effectiveness of their activities. Staff of
the Federal Reserve and the Department of Defense are currently collaborating to develop extensive
and ongoing survey instruments to measure the value of financial education courses offered to Army
personnel. Organizations such as Jump$tart, the National Endowment for Financial Education, and the
National Council on Economic Education have employed various testing and survey strategies to
quantify the impact of and measure the need for their programs.
In considering how to develop measurement criteria for financial education programs, it is logical to
begin with primary objectives. The desired outcomes for financial education are
Getting the message out - that is, increasing consumers' awareness of the importance of the

issue to their well-being.
Altering consumer behavior to improve short- and long-term prospects.

These goals have parallels to other public awareness and educational campaigns, and the parallels
can assist in program design and evaluation. I will illustrate by offering some perspectives.
With regard to the first outcome - getting the message out - the Ad Council has sponsored studies to
determine the impact of public service announcements on its targeted audiences. The findings
suggest that certain public service announcements are effective in increasing awareness, reinforcing
positive beliefs, intensifying concern, and moving people to action. One study, conducted by the
Advertising Research Foundation, focused on the impact of public service announcements for colon
cancer awareness that were aired in four major cities over the course of a year. The research found
that as a direct result of the public service announcement, awareness of the threat of colon cancer
increased by more than 3.5 times after a year, and the number of people discussing colon cancer with
their doctor increased by 43 percent. The research also found that the message had a particularly
strong impact on men, with awareness among males increasing nearly six times and the number of
males taking action increasing by 114 percent.
A separate study was conducted by the University of Wisconsin to gauge the impact of the National
Crime Prevention Council's anti-crime campaign. This study found that awareness of the trademark
McGruff the Crime Dog reached 80 percent among the general public and 88 percent among crime
prevention practitioners. In addition, nearly one-third of respondents indicated that they had learned
from the public service announcements, and one-fifth reported that they had taken specific actions as
a result of what they had learned from the campaign. These research findings suggest that
issuerelated information campaigns not only increase awareness of the importance of a given topic, but
also motivate positive behavior change.
The second objective is to alter consumer behavior. This key goal is unfortunately quite difficult to
quantify, but financial education organizations have committed their resources to conduct surveys and
administer tests in order to better estimate programmatic impacts. The U.S. Department of Education
is one agency that has conducted such assessments. It studied literacy programs involving
teachingrelated issues, including the provision of reading skills instruction to parents alongside children, the
effectiveness of participatory and traditional approaches to teaching, and strategies for increasing
participation and ongoing development of reading skills.
While there are many factors that differentiate financial education from adult literacy training, certain
research results are suggestive. In particular, studies of methods that engage both parents and
children in the educational process do reveal positive outcomes. One study compared the results of
participants in Toyota Families for Learning, a family literacy-training program, with the results for
participants in two adult-oriented literacy programs. Participants in the family-focused programs gained
more than one grade level in their reading skills after one year, much greater than the grade-level
increase of students in the two adult-oriented programs. The study attributes the increased level of
success to higher retention rates in the family-focused program. It showed that 19 percent more adults
remained in the family-focused program for more than twenty weeks. Other research on family literacy
programs indicates that benefits also spread to child participants, with young children showing an
increased interest in literacy and being better prepared for school than their peers.
Some other relevant information on educational programs designed to change consumer behavior
may be found in research sponsored by the U.S. Department of Agriculture's (USDA) Food and
Nutrition Service. The agency has evaluated a range of nutrition education, health promotion, and
social marketing programs intended to improve consumers' understanding of the importance of good
nutrition. The agency reviewed more than 200 studies that evaluated education research and
intervention programs. These studies found that successful programs typically had five common
characteristics:
They set behavior change as a specific program goal.

They incorporated motivating communications into the program.

They taught strategies for behavior change.

They included active involvement of both the individual and the community.

They attempted to build health-enhancing environments.

The review also highlighted the findings of one evaluation of a school health education program
reaching about 30,000 students. This study found that between five and fifteen hours of instruction
resulted in enormous gains in students' knowledge about nutritional programs. However, between
twenty-five and fifty hours of instruction were required to bring about any change in student behavior
and attitudes, and even with this amount of instruction, the effects on attitudes were very small. These
findings demonstrate the enormousness of the challenge in influencing behavior change through
education.
I would also like to comment on the importance of developing effective information-delivery
mechanisms. The agencies previously mentioned, along with others, have developed innovative
Internet-based programs to provide education and information. Technology can play a big role here,
by increasing the efficiency of financial education programs and by centralizing resources into
information clearinghouses, which may help to reduce duplicative efforts and better exploit scarce
resources. One example involves the Agency for Healthcare Research and Quality (AHRQ), which
engages in activities that promote informed consumer decision-making. The agency uses different
strategies to provide information to consumers on various health-related issues, including medical
conditions and procedures, as well as on the range of choices in health care options and plans. Over
the last several years, AHRQ has been developing software and database programs designed to help
consumers and others choose among the wide variety of health care plans. This system, the
Consumer Assessment of Health Plans, uses computer-driven survey instruments and reporting tools
to collect data that permit a better understanding of consumers' sentiments about health care
programs and experiences. Such a system could serve as a model for using technology to help
consumers assess their financial needs.
Let me conclude by repeating how pleased I am to see this group of dedicated professionals meeting
and discussing the challenges that face public educators. I would like to thank the Federal Reserve
Bank of Atlanta for hosting today's conference and bringing together this group of educators. With your
expanded knowledge and new contacts, I encourage you to continue to seek new and innovative ways
to further your work and measure the outcomes of your programs. Success in increasing economic
and financial literacy will be very important to the individuals you serve, as well as to the overall
economy.