Behavioral economics in U.S. financial literacy programs: A comprehensive review - Evaluating the role of psychology-driven strategies in enhancing understanding and responsible financial behaviors among citizens

Bamidele Segun Ilugbusi 1, * and Olawale Adisa 2

1 Department of Business Administration, Afe Babalola University, Ado-Ekiti.
2 Jack Welch College of Business, Department of Economics, Sacred Heart University, Fairfield, USA.
 
Research Article
International Journal of Science and Research Archive, 2024, 11(01), 2384–2398.
Article DOI: 10.30574/ijsra.2024.11.1.0238
Publication history: 
Received on 17 December 2023; revised on 20 February 2024; accepted on 22 February 2024
 
Abstract: 
This study critically evaluates the integration of behavioral economics into U.S. financial literacy programs, focusing on the enhancement of understanding and promotion of responsible financial behaviors. The main objective is to explore how psychology-driven strategies can improve financial decision-making and literacy. Employing a systematic literature review and content analysis methodology, the study analyzes data from academic journals, government reports, and industry publications, focusing on literature published between 2013 and 2023. Key findings indicate that the incorporation of behavioral economics principles, such as understanding cognitive biases and heuristics, significantly enhances the effectiveness of financial literacy programs. Personalization of financial education to individual needs and the use of behavioral nudging techniques are identified as effective strategies in promoting responsible financial behaviors. The study also highlights the challenges and opportunities in the field, particularly the need for financial education to adapt to technological advancements and evolving economic landscapes. Strategic recommendations include developing comprehensive curricula that integrate behavioral insights, tailoring programs to diverse demographic groups, leveraging technology for engaging and accessible education, and conducting ongoing research to inform teaching methodologies and policy-making. Lastly, the study underscores the importance of integrating behavioral economics into financial literacy programs. It suggests that a multifaceted approach, combining innovative educational practices, technology, and continuous research, is crucial for fostering a financially literate society capable of making informed and responsible financial decisions. The study provides a foundation for future research in the field, encouraging further exploration and academic discourse.
 
Keywords: 
Behavioral Economics; Financial Literacy; Financial Education; Decision-Making Psychology
 
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