A picture says a thousand words. This is the often referred to example of why knowledge, by itself, is not very effective in behavior change. Evidence of the devastating impact of smoking on nurses is captured by the team at UCLA in the well known Nurses Health study. There are many other great insights on why education (knowledge) in isolation is not effective in facilitating behavior change. It’s a pristine lesson in (ir)rationality.
In financial well-being:
Kristen Berman, a behavioral economist who co-founded Duke University’s Common Cents Lab was recently quoted in InvestmentNews as saying:
“Financial advisers, I think, have some belief if they can educate their clients about their finances, this will lead to behavior change. And we haven’t found that to be true”.
Further evidence is provided in this large scale meta-analysis: Financial Literacy, Financial Education, and Downstream Financial Behaviors
“Policy makers have embraced financial education as a necessary antidote to the increasing complexity of consumers’ financial decisions over the last generation. We conduct a meta-analysis of the relationship of financial literacy and of financial education to financial behaviors in 168 papers covering 201 prior studies. We find that interventions to improve financial literacy explain only 0.1% of the variance in financial behaviors studied, with weaker effects in low-income samples. Like other education, financial education decays over time; even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention.” [emphasis added]