Fictional Money, Real Costs: Impacts of Financial Salience on Disadvantaged Students
American Economic Review · 2022 · Volume 112 · Issue 3
Abstract
Disadvantaged students perform differentially worse when randomly given a financially salient mathematics exam. For students with socioeconomic indicators below the national median, a 10 percentage point increase in the share of monetary themed questions depresses exam performance by 0.026 standard deviations, about 6 percent of their performance gap. Using question-level data, I confirm the role of financial salience by comparing performance on monetary and highly similar non-monetary questions. Leveraging the randomized ordering of questions, I identify an effect on subsequent questions, providing evidence that the attention capture effects of poverty affect policy relevant outcomes outside of experimental settings.
Keywords
Household Finance: Financial Literacy, Analysis of Education, Education and Inequality, Measurement and Analysis of Poverty, Fertility, Family Planning, Child Care, Children, Youth, Economic Development: Human Resources, Human Development, Income Distribution, Migration
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