J-PAL’s Financial Literacy Research Shows What Works and What Doesn’t

CAMBRIDGE, Mass., August 13, 2026 — Financial literacy can affect how households manage income, save money, use credit, and plan for future expenses. But providing financial information does not always lead to better financial decisions. The Abdul Latif Jameel Poverty Action Lab, or J-PAL, a global research center based at the Massachusetts Institute of Technology, studies this gap by testing financial education and financial services programs and measuring how they affect people’s financial knowledge and behavior. J-PAL works through a network of more than 1,100 researchers at universities around the world and has conducted randomized evaluations across a wide range of poverty-related issues.

Financial literacy is part of J-PAL’s Finance sector, which examines how financial products and services can become more affordable, appropriate and accessible to underserved households and businesses. Its research covers financial education, savings, credit and other financial services, with studies designed to provide evidence that can help governments, financial institutions and other organizations make better policy and program decisions. J-PAL says its affiliated professors have led more than 2,600 randomized evaluations, while its policy work has helped translate research findings into lessons for governments, NGOs, donors and private-sector organizations.

South Africa Study Examines Results of Financial Education

One J-PAL evaluation examined Old Mutual’s On the Money financial literacy program in South Africa. Researchers studied whether a one-day financial education course could improve financial knowledge and practices and encourage greater use of financial services among low-income participants. The study was conducted in the Eastern Cape and included members of 43 Burial Society Support Plan groups and 36 Women’s Development Businesses borrowing groups. Women represented 89% of the study sample.

The course covered savings, financial planning, budgeting, debt management and investing. Participants attended presentations and watched educational videos in their native languages, then completed exercises such as preparing a household budget and developing a financial plan. Researchers randomly assigned groups to receive the training or serve as a comparison group and conducted a follow-up survey about six months after the program. Of the 589 people offered the training, 71% attended.

Budgeting Knowledge and Savings Showed Gains

The evaluation found that the program improved participants’ knowledge of budgeting, increased self-reported savings, and reduced loan applications. The gain in budgeting knowledge was particularly strong among participants with lower levels of education. Awareness of different budgeting concepts was 6.1 percentage points higher among people offered the program than among those in the comparison group.

The results were not the same across every measure. Researchers found no significant improvement for the overall sample in awareness of savings accounts, loans or insurance, or in understanding the importance of separating business and household accounts. The program also did not produce consistent changes in attitudes toward financial institutions and financial products. The findings show that financial education can improve specific areas of knowledge and behavior, while a single training program may not affect every financial decision.

Photo credit: J-PAL

Financial Education is One Part of Financial Inclusion

J-PAL’s finance research places financial literacy alongside access to financial products and services. Knowing how a savings account or loan works does not necessarily mean that a person can access a suitable product or will use it effectively. Research in the Finance sector therefore examines both financial knowledge and the availability, design and use of financial services among underserved households and businesses.

This distinction is important for financial literacy programs. Education can give people information about budgeting, saving, borrowing and investing, but other factors can also influence financial decisions. Access to suitable accounts, credit, insurance and other services can affect whether people are able to put that knowledge into practice. J-PAL’s research gives policymakers and financial institutions a way to examine these factors through measured results rather than relying only on assumptions about financial education.

Research Connects Financial Literacy with Policy

J-PAL’s work extends beyond individual studies. The organization works with governments, NGOs, donors and private-sector organizations to apply findings from randomized evaluations to policy and programs. J-PAL’s researchers and policy staff also conduct literature reviews, summarize evidence and produce cost-effectiveness analyses to help decision-makers assess different interventions. J-PAL says programs and policies informed by evaluations conducted by its affiliated researchers have reached more than 850 million people.

For financial literacy, this research provides a more specific way to assess whether education is working. The South Africa study found measurable gains in budgeting knowledge, self-reported savings and loan applications, but not across every financial measure. That distinction matters for organizations designing financial education programs because it shows that success should be measured through specific financial behaviors and outcomes, rather than through participation or knowledge gains alone. J-PAL’s research therefore places financial literacy within a wider question: whether people have the knowledge, access, and financial tools needed to make sound decisions about their money.