Empirical Model
An assessment of financial literacy (FL), pre and post educational program delivery, was
conducted to understand the association between variables. The empirical model for the research
is expressed as follows:
ΔFL = F(DC+FA+FC+PE(n)+C)
Demographic characteristics (DC), familial characteristics (FA), and financial
characteristics (FC) were used and expressed in the model.
The dependent variable, change from the pretest to posttest financial literacy scores, was
assessed by a composite measure (FL). The sub-components of financial literacy, basic financial
knowledge (BFK), and sophisticated application of knowledge (SAK), are shown in the
following model.
ΔFL = (FL
t1
) - (FL
t0
)
FL
t1
= [(BFK
t1
) + (SAK
t1
)]
FL
t0
= [(BFK
t0
) + (SAK
t0
)
The sub-components of financial literacy, basic financial knowledge (BFK) and
sophisticated application of knowledge (SAK), were assessed using two groups of questions as
follows:
BFK = (BFK
1
) + (BFK
2
) + (BFK
3
) + (BFK
4
) + (BFK
5
) + (BFK
6
) + (BFK
7
)
SAK = (SAK
1
) + (SAK
2
) + (SAK
3
)
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The variable for participation in the financial education program (PE) was used in the
model to represent those who have participated in the financial education program. The number
of classes attended in the PE will be represented in the model as (n).
Data Analysis
To address the first research question, a t-test was used to see if the average change in
financial literacy scores was significantly greater among the participant group versus the control
group. The second research question also used a t-test to determine if the average change in
financial literacy scores among participants who attended a higher number of classes was
significantly greater than participants who attended a fewer number of classes. Research question
three focuses on participation in the education program and changes in financial literacy scores,
taking into consideration the characteristic differences between the participant and control
groups. The research seeks to more clearly understand if participation in the education program
really matters, controlling for the age, ethnicity, education level, marital status, gender, income,
and net worth differences between the two groups. This analysis will provide better
understanding of the effectiveness of the financial education program by controlling for the
differences in makeup of the participant group as compared to the control group, helping to
further clarify the results of the t-tests performed in question one.
Consistent with the financial literacy framework, a series of subjective questions were
asked pertaining to changes in behaviors and beliefs since the beginning of the educational
program. The data collected 90 days following the program conclusion will provide a self-
reported measure of changed behaviors and beliefs among participant responders.
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