Abstract
This paper describes a corporate-sponsored research effort whose goal was to help consumers obtain and maintain good credit through consumer education. Freddie Mac in collaboration with five historically Black colleges and universities (HBCUs) and three national nonprofit consumer organizations sponsored this initiative, known as CreditSmart©, which involves research, curriculum development, and outreach. In order to inform the curriculum and outreach, the authors evaluate the effectiveness of learning about finances through formal, informal, and experiential sources. They also examine whether there are ethnic or cultural differences in these effects. The proposed model of consumer financial knowledge was tested using the 1999 Consumer Credit Survey (CCS) data collected from approximately 12,000 consumers. This dataset includes a variety of questions about childhood experiences with money, financial knowledge, attitudes, and experiences, as well as assets, debts, and demographic characteristics.
Findings suggest that formal training and childhood financial experiences are significant predictors of financial knowledge across the sample population as a whole, while informal, word-of-mouth sources have a significant additional impact among African-American consumers. Implications for social marketing and consumer education are discussed.
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