Using Research to Improve the Financial Well-being of Canadians: Post-symposium Report

Attendees sitting in a conference room during the 2018 Research Symposium.


The Financial Consumer Agency of Canada (FCAC) co-hosted the 2018 National Research Symposium on Financial Literacy on November 26 and 27 at the University of Toronto, in partnership with Behavioural Economics in Action at Rotman (BEAR).

Centred on the theme Using Research to Improve the Financial Well-being of Canadians, the symposium reflected the growing recognition of the power research has to make a difference. Distinguished researchers and practitioners from Canada and around the world shared their research on financial literacy, as well as insights on how research can inform real-world practices to improve financial outcomes for individuals and families.

The symposium was a huge success, an indication of the importance being placed on research into financial literacy to help improve people’s lives.

This report presents the key ideas and takeaways from the event, while shining a light on the exciting research shaping new solutions designed to enhance financial well-being in Canada and around the world.

For additional information, the BEAR website has video and presentation slides for each of the sessions.

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Foreword by symposium hosts

Those of us working in the fields of financial education and financial well-being often hear about new and interesting research. But rarely do we get to gather face-to-face with the people responsible for driving that research, and explore first-hand the deeper insights they can offer. The 2018 National Research Symposium on Financial Literacy provided that unique opportunity.

With more than 260 participants, the event was an incredible learning and networking forum that featured magnetic panellists and speakers, thought-provoking dialogue between audience and presenters, a spirited debate on innovation and financial inclusion, and poster presentations that added to the overall experience.

From the quantitative to the qualitative, presenters shared findings from their latest surveys and testing, as well as human stories behind the numbers that brought to life how people, particularly the financially vulnerable, cope with their everyday financial challenges. We learned about promising new strategies for helping people improve their decision-making, as well as other developments being tested that are re-imagining personal finance for Canadians.

Beyond the wealth of ideas and insights, what the gathering perhaps illuminated most is that researchers and practitioners are coming together like never before to figure out the complex and interconnected universe of financial behaviour and well-being. They are sharing lessons learned and finding diverse ways to experiment, innovate and come up with solutions that make a real difference. The symposium showcased this uptake of evidence-based interventions with highly successful results.

The marriage of research and practice is absolutely fundamental if we want to push the boundaries and bring about positive changes in Canadians’ financial well-being. New research is challenging all of us to rethink and evolve our approaches, taking the guesswork out of financial literacy interventions by providing hard data and clues on why, how and where we need to focus efforts. We encourage academics and practitioners to not only continue pushing the research agenda on related topics, but also encourage practitioners to continually test and get feedback on their initiatives and interventions.

And that’s a good thing because ultimately it means better results for Canadians.

Thank you to everyone who joined us at the symposium. You signified a desire to advance your individual work and the financial well-being movement on a foundation of empirical research. We hope you left energized and full of ideas. For those who missed out, we hope you draw inspiration from this summary report, which offers a flavour of the quality and relevance of the sessions.

Let’s keep the momentum going! We look forward to continuing to work together as we have done for many years now to make a meaningful, long-term impact on the financial well-being of all Canadians.

Lucie Tedesco, Commissioner, FCAC

Lucie Tedesco, Commissioner, Financial Consumer Agency of Canada

Dr. Vivek Goel, Vice-President, Research and Innovation, University of Toronto

Vivek Goel, MD, Vice-President, Research and Innovation, University of Toronto

Jane Rooney, Financial Literacy Leader, FCAC

Jane Rooney, Financial Literacy Leader, Financial Consumer Agency of Canada

Dr. Dilip Soman, Director, Behavioural Economics in Action at Rotman, University of Toronto

Dilip Soman, PhD, Director, Behavioural Economics in Action at Rotman, University of Toronto

Symposium highlights

Infographic - Symposium highlights
Infographic - Text version

Highlights - National Research Symposium 2018

  • 90% rated the event as excellent or very good
  • 95% agreed progress is being made to advance financial literacy research
  • 89% found the knowledge and information gained from the symposium useful and applicable to their work
  • 266 registrants
  • 33 speakers
  • 11 posters
  • 7 plenary sessions

Research Takeaways

Active saving improves financial well-being

Research in several countries shows people can substantially improve their financial resilience and well-being by regularly saving even small amounts for unexpected expenses. Regular saving also leads to other positive financial habits and helps build financial resilience.

Borrowing for daily expenses is detrimental to financial well-being

Relying on credit to pay for daily expenses is linked to lower financial well-being, research shows.

Personality and attitudes can override the benefits of financial literacy

Research shows that personality and attitudes about finances can have the greatest impact on financial decisions, even outweighing the positive impact of financial literacy. This helps explain why even the best-educated people can make poor financial decisions.

The vicious cycle: financial stress and scarcity lead to poor decisions and more stress

“Mental taxes” such as financial stress and scarcity (having limited resources or time) reduce cognitive abilities and lead to poor financial decisions. So people who are already overwhelmed by managing their money can get caught in a vicious circle.

Financial education helps build money management skills

Studies show the positive influence of financial education on decision-making. Simple interventions led to sustained budgeting behaviour and improved product selection, such as TFSA vs. RRSP.

Hope is good

From tackling debt to running a marathon, setting sub-goals is a winning strategy. Achieving smaller goals gives people a sense of progress and inspires them to tackle their bigger goals. This is an important life lesson that can be applied to money management.

Confidence matters

Studies show improving financial confidence boosts decision-making abilities and outcomes.

Nudging facilitates better choices

Innovations that nudge people to change behaviour are helping individuals make better financial choices, from saving annual tax refunds to making optimal repayments on credit card debt. Personalization and simplicity are behind the success of these initiatives, informed by behavioural insights.

The financial landscape must be geared more to real people not “econs”

Humans behave differently from what we see in economic models. The financial marketplace needs to be designed with this in mind, including clear information and simple instructions, to help people make decisions in their own best interest.

Welcome messages

Kelley Keehn, Master of Ceremonies, Personal Finance Author and Educator

“I’m passionate about making Canadians feel good about money. But the reality is so many Canadians don’t. They are facing record levels of debt, despite low interest rates in this country. There are so many Canadians who cannot withstand the smallest of emergencies, and behind all of that is a lot of shame and embarrassment. And they are not reaching out for the help they need.”

Kelley Keehn, Master of Ceremonies, Personal Finance Author and Educator

Dr. Vivek Goel, Vice-President, Research and Innovation, University of Toronto

“We often think of challenging issues being things like climate change or the sustainability of the health care system, but the future debt burden that consumers have or how people make decisions about their everyday financial lives are very significant challenges.”

Vivek Goel, MD, Vice-President, Research and Innovation, University of Toronto

Lucie Tedesco, Commissioner, FCAC

“Our theme Using Research to Improve the Financial Well-being of Canadians reflects growing recognition of the power research has to make a difference. Learning from each other’s research and analyses will give us more insight into the missing pieces of the larger financial literacy puzzle.”

Lucie Tedesco, Commissioner, Financial Consumer Agency of Canada

Keynote speaker: how approaches have evolved

Professor Elaine Kempson, University of Bristol

"Financial well-being is being able to meet all one’s current commitments and needs comfortably and having the financial resilience to maintain this in the future.”

Elaine Kempson, PhD, University of Bristol

A trailblazing researcher in the field, keynote speaker Professor Elaine Kempson of the University of Bristol talked about how research and practice into the concepts of financial literacy, financial capability and financial well-being have progressed since the early 2000s, touching on her own studies conducted over that time to highlight the evolution.

In the early days, she recalled, practitioners focused on building knowledge and skills – based on the belief that financial literacy can be taught – while researchers attempted to measure financial literacy levels within the population: “They decided what citizens ought to know and then went out to measure whether they knew it.”

A critique of this approach was that it was too narrow; knowledge and skills should not be seen as an end in their own right. Moreover, there was plenty of evidence that people often know the right things and what they should be doing, yet were still doing the wrong things. That’s because, while knowledge is important and can have an effect, it can be “overridden by attitudes and personality.” According to Professor Kempson, behaviour is largely influenced by factors that can’t be taught, as well as the landscape in which we live, “where consumption is king and advertising is designed to encourage us to spend recklessly and borrow in order to spend.”

From this critique emerged a focus on financial capability, which concentrated on people’s behaviours and the factors that shape them (what people do rather than what they know). Professor Kempson stated that while this approach was a step forward, it didn’t differentiate which behaviours are most important and why.

More recently, researchers and practitioners have turned their attention to the broader notion of financial well-being, where the focus is on outcomes. Professor Kempson defined financial well-being as “being able to meet all one’s current commitments and needs comfortably and having the financial resilience to maintain this in the future.” And, she said, it’s determined by the interplay of factors including behaviours, knowledge and skills, attitudes and confidence, along with income and a range of environmental and other economic factors (see Figure 1). So it is the result of the income you have and how you use that income, and subject to outside societal influences.

Figure 1: Conceptual model of the determinants of financial well-being

The conceptual model of the determinants of financial well-being as described in the two paragraphs below.

Professor Kempson discussed how she and her colleagues created an international program of research to define and investigate the drivers of financial well-being, in particular, the inter-relationships between financial capability (behaviours), financial literacy (knowledge, skills and experience), personality traits and attitudes. A Financial Well-Being Survey was first conducted in Norway in 2017 and subsequently in several other countries, including Canada, Australia, New Zealand and Ireland. According to Professor Kempson, this is the first time “we have a wealth of internationally comparable data…with some fascinating and very valuable findings,” which were the subject of the symposium’s first panel session.

Read Kempson, Finney, and Poppe’s research report “Financial Well-being: A Conceptual Model and Preliminary Analysis.”

Session highlights

Day 1, Panel 1: Financial well-being around the world

What is the state of financial well-being in Canada? And how does it compare with other countries?

During this panel, experts shared the latest research findings from their countries, based on the Financial Well-Being Survey developed by Professor Elaine Kempson and her colleagues that measures the financial well-being of adults. The survey was designed to investigate key drivers of financial well-being, such as the ability to meet everyday commitments and resilience for the future, and allow comparison across countries.

Steve Trites (moderator), FCAC

Steve Trites, Financial Consumer Agency of Canada


Regional findings: Canada

Dr. Rebecca Kong of FCAC shared some preliminary Canadian results from the Financial Well-Being Survey.

Canada’s overall financial well-being score was 65 out of 100, which was lower than leading country Norway (77) but above Australia and New Zealand (both at 59; see Figure 2).

Figure 2: At a glance: financial well-being in Canada and elsewhere

Financial well-being in Canada, Australia, New-Zealand, and Norway as described in the paragraph above.

She also noted Canadians are doing especially well at meeting financial commitments, such as having enough money to pay bills on time.

Dr. Kong said, however, Canadians fall short in some key areas:

Dr. Kong stressed these behaviours are concerning because they are tied to financial resilience and financial well-being. Two specific behaviours, active saving and not borrowing for everyday expenses, are vital to financial well-being, a point echoed by other presenters.

Using several case studies of survey respondents, Dr. Kong illustrated the importance of these daily financial behaviours. Regardless of how much they earn, individuals can substantially improve their financial resilience and well-being by regularly saving even small amounts for unexpected expenses. Even within income brackets, “these two behaviours are associated with such a dramatic difference in financial well-being score,” she said.

Dr. Kong said the findings reinforce for Canadians, practitioners and policy-makers the essential link between active saving and overall financial well-being. The benefits of active savings include helping Canadians to better prepare for emergencies, reducing stress related to financial uncertainty and providing a buffer to avoid relying on credit, all of which increase financial resilience for the future.

“There are some aspects of a person’s financial well-being that are very difficult for us to modify. Income, for example, is hugely important, but it’s difficult for us to do very much about it for a particular individual, at least in the short term. Behaviours, on the other hand, have the potential to be changed. If we can identify which behaviours are making the biggest impact on financial well-being, we can look at ways to address any issues.”

Rebecca Kong, PhD

Read FCAC’s "Backgrounder: Preliminary findings from Canada’s Financial Well-Being Survey."

Regional findings: New Zealand and Australia

Celestyna Galicki of the New Zealand Commission for Financial Capability (CFFC) outlined the key findings and insights from two studies: the Financial Well-Being Survey conducted in New Zealand and Australia (“ANZ study”), and the Financial Capability Barometer that measured financial well-being in New Zealand through self-reported data.

The average financial well-being score on the Financial Well-Being Survey for adult New Zealanders and Australians was 59 out of 100. The research found that economic factors only contributed 15% to explaining differences in financial well-being, with household income accounting for 8% of that. As such, income is not the most important determinant of financial well-being, as many might expect.

The study did reveal that financial well-being is impacted by income when it is very low or very high, but in the middle of the income scale there is little difference (see Figure 3). According to Ms. Galicki, this is an important finding that can help counter the misperception that having a good income translates to financial success: “Financial well-being is not just about income but a host of other factors.”

Figure 3: Relationship between income and financial well-being

The relationship between income and financial well-being as described in the paragraph below. Text version below.
Figure 3 - Text version
ANX study: income matters at the top and bottom but not that much in the middle
  Under $25,000 $25,000 to $50,000 $50,000 to $75,000 $75,000 to $100,000 $100,000 to $125,000 $125,000 to $150,000 $150,000 or more
People with a financial well-being score in the 75th percentile 61 77 81 83 88 88 94
People with an average financial well-being score 46 57 61 65 70 71 78
People with a financial well-being score in the 25th percentile 28 38 42 51 56 53 73

The key takeaway is that financial behaviour (43%) has the biggest impact on well-being. Similar to the Canadian results, active saving and not borrowing for daily expenses are the top behaviours that contribute most to people’s overall level of financial well-being (jointly accounting for 35%). Ms. Galicki added that certain types of borrowing are especially detrimental to financial well-being, in particular, borrowing from friends and family and unpaid credit cards.

With respect to financial knowledge/experience, the results show it has a limited influence (10%) on financial well-being scores. She stressed that this does not imply that financial knowledge/experience is irrelevant, but it does reveal other factors such as behavioural and psychological influences play a stronger role on financial outcomes.

Read more about Financial wellbeing in New Zealand.

Read more about CFFC’s Financial Capability Research and Evaluations.

The global picture: an international comparison

Professor Elaine Kempson, University of Bristol, participated in the panel discussion to provide an international comparison of the 5 countries, including Canada that conducted the Financial Well-Being Survey.

She highlighted some overarching findings with respect to measures of financial well-being such as:

How do countries compare for specific financial capabilities?

Professor Kempson reinforced what the other presenters highlighted. Across all countries, 2 behaviours drive financial well-being: active saving and not borrowing for daily expenses. She also pointed out that, at the national level, there seems to be a link between the financial well-being of a population and the level income inequality (Gini coefficient) but not average incomes (see Figure 4).

Figure 4: How countries compare on incomes and income equality

How countries compare on income and income inequality. Text version below.
Figure 4 - Text version
Country Disposable income* Gini coefficient** Overall financial well-being
Norway $38,469 27 77
Canada $32,944 32 65
Ireland $25,998 30 64
Australia $35,577 34 59
New-Zealand $25,871 32 59

*Disposable income is based on average household net disposable income per capita and is in USD (OECD 2017).

**The source for the Gini coefficient is the Organisation for Economic Co-operation and Development and was checked in October 2018.

Norway is a country with one of the lowest levels of income inequality as well as the highest level of financial well-being. She acknowledged there is a limit to what can be achieved in terms of raising national levels of financial well-being if income inequality is high, as is the case in the United States. “Without tackling income inequality, efforts to improve financial well-being through behavioural change will always be held back.”

Financial well-being across all countries is determined by a combination of the money people have and the ways they manage it, with the latter being influenced by factors such as personality, knowledge and experience. The research shows personality traits can sometimes have a big impact and override knowledge in the financial decision-making process.

“There are remarkable similarities across countries and because of that we can learn a lot from one another. But equally important there are some interesting differences, which indicate where individual countries might want to focus their efforts.”

Professor Elaine Kempson, PhD

Day 1, Panel 2: Financial vulnerability

Financial vulnerability is widespread across North American society and evident across all income levels. With household debt levels increasing in recent years, financial vulnerability is on the rise and compromising people’s ability to deal with financial shocks such as unexpected emergency expenses or a sudden drop in income.

A panel of experts who recently studied financial vulnerability in Canada and the U.S. underscored these realities. They considered questions such as: Who is considered financially vulnerable? What does it mean and what are the implications? And how can it be addressed through interventions?

Understanding vulnerability

Dr. Brenda Spotton Visano (moderator), York University

Brenda Spotton Visano, PhD, York University


Watch "Financial vulnerability" video.

View "Financial vulnerability" slides [PDF].

To frame the session, Dr. Brenda Spotton Visano of York University explored the meaning of financial vulnerability. While the term implies different things to different people, she noted that generally we know financially vulnerable households struggle financially, feel stressed about their finances, are at risk of bankruptcy and debt default, and are also at risk of having their financial situation disrupted by an unexpected expense or sudden loss of income.

“The inability to meet financial obligations arises for different reasons in different circumstances,” said Dr. Spotton Visano, who presented two key “constructs” through which to view financial vulnerability:

“To strengthen the financial well-being of Canadians and their families, we need to better understand the financial situation of Canadian households; in particular, the financial challenges of Canadians who are financially insecure.”

Brenda Spotton Visano, PhD

Read more about Dr. Brenda Spotton Visano’s research.

How widespread is poverty in Canada?

In his presentation, Dr. David Rothwell of Oregon State University delved into poverty and vulnerability with a focus on Canada’s middle class. His recent research workFootnote 1 examined the relationship between asset poverty (having insufficient financial assets or net worth to maintain well-being) and income poverty (when household income level is below the established poverty line) and how these evolved in Canada over the past 2 decades. What do the intersections tell us about vulnerability across the population? How has the joint distribution of income/asset poverty changed over time?

Among his findings (refer to Figure 5):

Figure 5: Vulnerability over time: Canadians

Financial vulnerability of Canadians between 1999 and 2012 as described in the paragraph below.

Looking at the middle class (i.e., middle income), there has been progress over time. More people are not income poor and the proportion of those who are asset poor is trending down, from 57% in 1999 to 49% in 2012. With respect to net worth, there is less progress and Dr. Rothwell suggests this is “where debt comes into the story.”

In terms of the working class (which Dr. Rothwell defined as those with less than a 4-year degree and less than median household income), asset poverty has also been decreasing; however, those who are joint income and financial asset poor have seen limited progress over time (from 56% in 1999 to 51% in 2012).

Dr. Rothwell’s work on the intersection of assets and income shows poverty is widespread in Canada, and large gaps remain between the working class and the rest of the country.

He believes these realities are troubling and “a real challenge for social policy makers and those who care about financial well-being.” This research suggests practitioners should consider assets (or lack thereof) in addition to income when exploring economic insecurity and potential interventions.

“Whether you’re talking about net worth or financial assets, we can think of between 30% to 60% of Canadian families being vulnerable.”

David Rothwell, PhD

Read more about Dr. David Rothwell’s research.

How widespread is financial fragility in United States?

Dr. Andrea Hasler of The George Washington University shared insights from her research into financial fragility, which she defined as the inability to cope with unexpected expenses in a short timeframe.

She presented findings from the 2015 National Financial Capability Study, the largest survey of its kind in the U.S. with 27,500 respondents (the study was also conducted in 2009 and 2012). Testing for financial fragility was based around the question “how confident are you that you could come up with $2,000 if an unexpected need arose in the next month.” Those who responded that they either certainly or probably couldn’t come up with $2,000 within 30 days were considered financially fragile.

Highlights of the 2015 results include:

Figure 6: Financial fragility in the U.S.

Financial fragility in the U.S. as described in the paragraphs above.

Figure 7: Financial fragility across household income

Financial fragility across household income as described in the paragraph below.

To find out why financial fragility existed among middle and higher income households, Dr. Hasler conducted other studies that found debt and family size to be contributing factors. Financially fragile middle and higher-income households are more likely to have a greater number of children, which results in significant expenses related to child care, education and other family matters.

“A broad cross-section of the population is financially fragile…not [just] the young, low-income and [people with] low education.”

Andrea Hasler, PhD

Read Hasler, Lusardi and Oggero’s working paper “Financial Fragility in the US: Evidence and Implications” [PDF].

Read Gupta, Hasler and Lusardi’s policy brief “Financial Fragility in the US: Evidence and Implications” [PDF].

Read the Global Financial Literacy Excellence Center’s “Financial Fragility Fact Sheet: Evidence and Implications” [PDF].

The importance of financial resilience

Public discussions have tended to focus on the traditional areas of financial literacy and financial capability as factors important to overall financial well-being. But another crucial, overlooked aspect is “financial resilience,” which can be seen as the flipside of financial vulnerability. Eloise Duncan of Seymour Consulting defined financial resilience as “the ability to weather unforeseen life events and financial shocks” and argued there is a need to broaden our understanding of this in Canada.

In their work, Ms. Duncan and her colleague John Lo have a particular focus on understanding and improving consumer financial resilience so people can enhance their ability to bounce back in times of financial hardship and successfully cope with financial stressors. She presented research findings from her firm’s annual longitudinal national Financial Health Index study. It explored Canadians’ levels of financial resilience, among other things.

By examining the state of Canadians’ financial resilience, she hopes to raise awareness of the topic and the financial challenges facing key segments of the population, including vulnerable groups. This can also inform the work of financial services providers.

Highlights of the 2018 study include:

Figure 8: Proportion of Canadians who stress “often” over financial outcomes

Proportion of Canadians who stress "often" over financial outcomes. Text version below.
Figure 8 - Text version
  Having money left over at the end of the month to save Being able to pay my monthly bills and general living expenses (e.g., groceries, utilities, insurance, etc.) Coming up with money for an unforeseen expense Having enough money to retire Managing my overall debt load Being able to pay my rent or mortgage
Not low income 27% 17% 22% 29% 21% 13%
Low income below $25,000 48% 43% 42% 41% 38% 24%
High income variability 46% 37% 41% 43% 36% 26%

Source: 2018 Financial Health Index study

According to Ms. Duncan, a deeper dive into the results shows many Canadians struggle with financial resilience, and some are more affected than others: women, renters, low-income people and millennials.

Her research also echoes global studies that show having high financial knowledge and skills doesn’t necessarily translate into being money savvy.

Read more about the Financial Health Index.

Beyond the numbers: human stories bring vulnerability to life

Complementing the quantitative research shared during the panel, Dr. Jerry Buckland of Menno Simons College went beyond the numbers to offer a preliminary qualitative perspective through a day-in-the-life look at financially vulnerable Canadians.

He spoke about a project he’s involved with called the Canadian Financial Diaries, which uses a “mixed methodology” approach of weekly discussions and daily tracking of finances over a 12-month period to capture data and human stories of low-income people. The weekly discussions between researchers and participants are interactive and open-ended, enabling them to articulate challenges they face. The research approach was first developed by David Hulme at the University of Manchester. It has been applied in several global South countries, and a major diaries project was recently completed in the United States, called the U.S. Financial Diaries.

The objective of the project is to better understand the financial lives and finances of vulnerable Canadians with low and modest incomes, working in casual or low-wage employment, or relying on social assistance.

Dr. Buckland said little is known about these areas, and observing household finances and people’s financial choices over a long period of time can yield deeper insights into the causes of financial vulnerability and the effectiveness of different responses, which can inform practice and policy.

While the project is still in its early stages, Dr. Buckland shared preliminary findings and stories about two of the participants, ‘Diane’ and ‘Marina,’ who are mid-way through their diaries. Both are single in casual employment and have low annual income ($9,000 to $10,000). He noticed they are managing their challenging financial situations differently. As examples of resilient behaviour, both participants are hard-working, have modest spending habits and are diligent in maintaining family or community relationships. Evidence of less resilient behaviour: Diane struggles to assert interests with her supervisor in a casual job and does not like to think about the future, while Marina does not feel comfortable exploring new jobs.

What’s clear, Dr. Buckland said, is that confronted with vulnerability, “people choose certain behaviours that in some cases enable them to cope better and in other cases to cope less well.” From his work interacting with many low-income people over the years, he has observed there are some broader systemic issues that should be addressed by governments and businesses. He suggested increasing supports to help get people into the workforce and improving banking options for low-income people who find that, in the face of more cashless transactions, the current low-fee bank account “isn’t working for many who are trying to control their spending.”

“We know very little in Canada about household financial dynamics. Current national aggregate statistics shed little light on the causes of financial stability or the finances of vulnerable people. So better knowledge is needed to advise better practice and policy.”

Jerry Buckland, PhD

Read more about the Canadian Financial Diaries.

Day 1, Panel 3: How a lack of resources distorts decision-making

During this session, experts who have studied the psychological effects of scarcity showed how it can lead people to act in ways that interfere with their financial well-being and even the well-being of others.

Scarcity, which can involve a lack of resources or even time, changes how people perceive the world and how they make decisions.

“Scarcity impairs cognitive function, which in turn leads to bad decisions and choices, which further perpetuates scarcity – a vicious cycle.”

Jiaying Zhao, PhD

The mental burden of scarcity

Dr. Jiaying Zhao of the University of British Columbia set the scene by speaking about how, in the past decade, there has been a “conceptual shift” from understanding scarcity as a lack of physical resources (money and time) to a broader view where scarcity can mean much more, including a lack of mental resources (working memory and attention).

Dr. Zhao cited various studies that examined the causal impacts of scarcity on a person’s brainpower, including:

Another study looked at how budgets influence decision making by randomly assigning people with a small or large budget to order from a restaurant menu. Using eye-tracking technology, the researchers were able to track people’s attention as they viewed the menu and then create an eye gaze heat map showing what people focused on (see Figure 9).

Among the findings:

Figure 9: An eye gaze heat map of people viewing a restaurant menu with low and high budgets

An eye gaze heat map of people viewing a restaurant menu with low and high budgets as described in the paragraph below.

According to Dr. Zhao, people pay attention to their environment very differently when they are low-income. It can lead to people missing out on savings that might benefit them: “Scarcity biases attention either to the price or time information and induces the neglect of the savings opportunity.”

What does this mean for practitioners and policy makers? Dr. Zhao said interventions should try to alleviate cognitive burdens and attentional neglect in people with low income by designing and delivering programs differently. This could include simplifying procedures and setting the right defaults or reminders.

Read more about Dr. Jiaying Zhao’s research.

Read more about the Psychological Responses to Scarcity [PDF].

Does poverty impair worker productivity?

Does poverty reduce a person’s productivity at work? This question led to a field experiment in rural India that considered the issue from different angles.

A number of recent studies suggest that poverty lowers cognitive function. “If cognitive effects matter, we expect them to show up here [on productivity],” said Suanna Oh of Columbia University.

She presented the findings of her joint work with other researchers.The experiment was conducted with low-income manufacturing workers for whom financial struggle is part of their daily lives. The researchers gave the workers part-time jobs for two weeks making disposable plates. The workers were given different payment schedules: some were paid mid-way through the work assignment and on the last day, and others were paid only on the last day.

Ms. Oh explained: “What we were curious about is that after the eighth day, do the people who received cash early behave more productively compared to those who did not receive any cash. We made the cash payment large enough to relieve their financial stress, equivalent to a month’s wages.”

The main outcomes of this experiment were that relieving financial constraints can have a positive impact on worker productivity.

Within 2 days of the pay, 58% of the early cash group paid off loans compared to 18% for the late cash group, and the hourly output of the early cash group increased by 5% after pay, compared to the late cash group. The early cash group made fewer mistakes. These mistakes tend to slow down production, so having received cash payments seems to have improved their focus and helped them increase productivity.

What the researchers also found is that the positive effects of cash were particularly significant for those who had very low levels of wealth. For those who had more wealth, the effects of cash were not distinguishable.

The research team also held “financial salience discussions” with participants to explore whether having people talk openly about their financial struggles made them more or less productive depending on their cash payment status. For example, participants were asked how they would obtain a large amount of funds in the event of an emergency situation.

Subsequently, the researchers found that the effect of these conversations depended on whether the worker was experiencing financial scarcity. If the worker had already received cash payments, the conversations had a positive effect on worker output. But for those with severe financial scarcity, the conversations did not improve output.

“Poverty has adverse psychological effects – it imposes a mental tax.”

Suanna Oh

Read more about Suanna Oh’s research.

Read more about Supreet Kaur’s research.

How reminders of resource scarcity shape consumer behaviour

People from all walks of life can experience scarcity. Understanding how the scarcity mindset affects consumers is a key research focus of Dr. Caroline Roux of Concordia University. In particular, her work explores how reminders of resource scarcity, even in resource-rich environments, affect consumers’ judgment and behaviour.

Citing a number of studies conducted over the past several years, she has found that resource scarcity, and reminders of it, makes people more competitive. This can lead to more selfish decision making, where people are focused on advancing their own welfare and sharing less with others.

Reminders of resource scarcity also tend to increase cheating behaviour, where people act dishonestly or unfairly for personal gain. For example, in one study, people were willing to misreport their status to secure housing subsidies.

However, consumers can act generously and honestly when experiencing resource scarcity if they will get something out of it; for example, they are more willing to donate to a charitable cause if they receive some type of public recognition such as their name in a newsletter. People are also less likely to cheat if simply told their actions are dishonest. Another finding is that being competitive can prompt consumers to seek out products or services geared to self-improvement.

Dr. Roux’s research provides a more nuanced understanding of why resource scarcity promotes selfish or generous behaviours in different contexts, with clues on ways to curb negative behaviours among those with a scarcity mindset.

“Thinking about not having enough and experiencing scarcity makes people more competitive, more selfish and, unfortunately, sometimes more dishonest. But once you understand the psychology of scarcity, you can then make them act more generously, more honestly and also help improve themselves.”

Caroline Roux, PhD

Read more about Dr. Caroline Roux’s research.

Repaying credit cards: the adverse impact of minimum payments

Credit card holders know if they can’t pay off the monthly balance in full, their statement gives them the option to make a minimum payment. How does that influence their card repayment decisions?

Sam Hirshman of the University of Chicago spoke about credit card debt and the ways minimum payments affect repayment decisions. He conducted research that looked at why people tend to make costly errors in how they use and repay credit card debt. Specifically, he studied people who hold multiple credit cards to look at their repayment strategies.

In the first wave of research involving two separate studies using survey and field data, Mr. Hirshman examined whether people realize interest is important when it comes to paying off credit card debt. In one study, participants were asked to rate the importance of 5 parts of repayment such as interest rate and debt amount. In another study, he analyzed budgeting app data for credit card repayments.

The research showed most people do know interest is important and want to pay off their highest interest rate card. However, “a sizeable proportion don’t have extreme enough intentions,” he said. This results in people making “costly errors” when deciding which credit cards to use and also which cards to pay off first.

In the second wave of research based on laboratory studies, Mr. Hirshman tested the impact of minimum payments on repayment strategies with multiple cards. Participants played a three-round debt game where they were randomly assigned to either a situation where a minimum payment was specified for each card or a situation without any minimum payments, and a budget of $3,000 to allocate to debt on 6 different cards.

While many people were attentive to interest rates and did focus on the highest interest account, minimum payments increased the tendency to spread payments across more cards, even more than was required by the minimum, instead of paying down debts in order from highest to lowest interest rate (an optimal strategy).

According to Mr. Hirshman, “they did this less well than if they didn’t have minimum [payments],” demonstrating that “minimum payments do reduce the likelihood of using the optimal strategy.” He suggested people may be employing a form of “naïve diversification strategy” when faced with minimum payments.

Read more about Sam Hirshman’s research.

Day 1, Panel 4: Innovative approaches to educating consumers

Financial knowledge helps people with their decision-making, especially around long-term planning. During this session, presenters provided concrete examples of how evidence-based research has guided their work educating and empowering consumers to make informed financial decisions.

A changing marketplace requires new approaches

For some time now, Canadians have been carrying high levels of personal debt combined with low levels of savings. What has changed recently is a rise in interest rates, said Dr. Karen Duncan of the University of Manitoba. She pointed out this is adding to Canadians’ financial stress.

At the same time, the financial landscape is changing at a rapid pace. In a marketplace characterized by sophisticated financial technologies, new competitors and ever-evolving financial products and services, “there is a lot that people are expected to know,” said Dr. Duncan. “And it can be difficult for individuals and families to keep up with the changes and to figure out which make sense for them.”

This is where education and awareness-building enter the picture.

Harnessing mobile technology to breed the budgeting habit

Nicole Rivest of FCAC discussed how the Agency has leveraged mobile technology to deliver financial literacy messaging and foster sustained budgeting behaviours among non-budgeters. She discussed the findings of two studies undertaken by FCAC using the Carrot Rewards mobile application, which offers consumers loyalty rewards points in exchange for performing simple tasks.

In 2016, FCAC led a budgeting pilot in British Columbia and Newfoundland and Labrador. Over the course of a month, over 29,000 Carrot Rewards app users received a series of consumer education messages and quizzes created by FCAC. Users who did not have a budget received two subsequent quizzes and consumer education materials to encourage them to create a budget for themselves. FCAC then measured changes in knowledge, confidence and behaviour for the non-budgeting group and compared them to a control group.

The pilot was very successful. Participants who did not have a budget and who progressed through the pilot showed measurable improvements across all three tracked metrics (confidence, knowledge and behaviour).

In 2018, FCAC did a follow up study with participants from the first study who were either budgeting by the end of the pilot or had plans to create a budget. The goal here was to evaluate the effectiveness of the pilot’s financial education interventions in encouraging non-budgeters to adopt sustained budgeting behaviours.

The outcome was overwhelmingly positive, said Ms. Rivest: “We found our budgeting financial messaging created sustained behaviour change among non-budgeters. So, for example, among our intervention group, we found 54% of those who began budgeting during the pilot were still budgeting 18 months later.”

The results also showed a positive link between budgeting behaviours and both positive financial attitudes and the ability to make bill payments: 70% of initial non-budgeters who had a budget at the time of the follow up study said they were keeping up well or very well with their financial commitments, compared to just 45% of initial non-budgeters who did not have a budget at the time of the follow-up study (see Figure 10). A similar pattern was evident with respect to confidence: individuals who were budgeters exhibited more confidence.

Figure 10: Ability of budgeters and non-budgeters to keep up with financial commitments over the past 12 months

The ability of budgeters and non budgeters to keep up with financial commitments over the past 12 months. Text version below.
Figure 10 - Text version
Groups Proportion keeping up well or very well
Reference group: Budgeting at pilot and follow up 84%
Intervention group: Budgeting at follow up 70%
Intervention group: Not budgeting at follow up 45%

Ms. Rivest summarized that financial education delivered using a mobile platform can have a sustained impact in improving financial behaviours, and budgets can help non-budgeters achieve their money management goals.

“People who budget have better financial outcomes. They use their budgets to pay down debts, save for the future and save for emergencies.”

Nicole Rivest

Read FCAC’s Backgrounder “Sustained behaviour change through financial education: A budgeting longitudinal study using mobile technology.”

Read FCAC’s research report “Initiating budgeting behaviour among non-budgeters: A financial literacy pilot using mobile technology.”

A behavioural model to activate the savings habit

People know saving is important, but the reality is many don’t make it a priority. So what is the key to getting more people to save, which research has shown is highly correlated with financial well-being?

Nick Watkins of Money Advice Service spoke about the work his organization is doing in the United Kingdom to help consumers save, with successful results to date. Mr. Watkins first touched on approaches that in his view don’t work. Telling people they should save, for instance, is not a useful strategy because most people already believe this: “They just find excuses not to save. And scaring people about the implications of not saving also doesn’t work too well.”

The Money Advice Service applies the “EAST model,” developed by the Behavioural Insights Team, to guide its programming and interventions (see Figure 11). Mr. Watkins explained that the model is based on the premise that “if you want to change savings behaviour, you’re more likely to be successful if you can make things easy, attractive, social and timely.”

He elaborated on each of these concepts:

Figure 11: The EAST Model, a UK initiative to motivate savings behaviour

The EAST Model, a UK initiative to motivate savings behaviour as described in the paragraph above.

“Fear is a terrible motivator. Telling people bad stuff is going to happen doesn’t work to encourage people to save.”

Nick Watkins

Read more about EAST: Four Simple Ways to Apply Behavioural Insights.

Read more about The Money Advice Service’s Research.

Educational videos improve retirement savings decisions

Dr. Pierre-Carl Michaud of HEC Montreal spoke about 2 retirement savings vehicles in Canada, Registered Retirement Savings Plans (RRSPs) and Tax Free Savings Accounts (TFSAs). He explained that a basic understanding of marginal tax rates is key to choosing which vehicle to use. And he asked whether financial education about the subject matter can improve decision-making.

Dr. Michaud and his colleagues designed a hypothetical experiment to learn how Canadians decide between the RRSPs and TFSAs once they have better knowledge of these options.

In his study, participants received a refundable tax credit and were told they had to invest in an RRSP or TFSA. Participants were shown an educational video that explained the different plans; through a randomized trial, some viewed a second video that further discussed clawback and marginal tax rates.

The researchers examined the effects of the interventions on people’s understanding of RRSPs and TFSAs and the quality of choices they made.

Among the findings from the experiment:

Read Boyer, d’Astous and Michaud’s research paper “Tax-Sheltered Retirement Accounts: Can Financial Education Improve Decisions?” [PDF]

Day 1, Panel 5: Debt management - how to encourage Canadians to pay down debt

The troubling state of Canadians’ debt levels was a recurring discussion point throughout the symposium and took center stage during this session. Presenters agreed it’s one of the top challenges of our time, and not just because national indebtedness hovers at record highs but also because many Canadians seem to be complacent.

How do we get people to care enough to take action? What’s the motivator more Canadians need to tackle their debts? How should Canadians tackle debt – where should they start and how should they go about being debt free?

Paying off debt is no easy feat, even for the most disciplined among us. It requires careful planning, forward vision and financial endurance over long periods of time. Presenters offered behavioural insights into understanding the factors that affect how consumers manage their debt as well as their views on how interventions can be better designed to help consumers repay their debts more efficiently.

Designing interventions for humans, not “econs”

“There are lots of psychological reasons why people get into debt,” said Dr. Dilip Soman of the University of Toronto. “And sometimes psychological factors are greater than money.”

To put the session into context, he said a lot of people in low-income brackets and even higher income brackets know that debt isn’t a good thing, but they need it. And it’s become easier and easier to spend and get into debt.

Dr. Soman therefore recommended the focus should be on what consumers actually do and developing solutions that are consistent with actual behaviours. It’s about treating people like humans, not “econs,” he said. “Econs live on the pages of economic textbooks, yet we design financial systems (products and services) for ‘econs’ knowing that it’s humans that will use them” (see Figure 12).

Figure 12: A comparison of ‘econ’ and human behaviours

A comparison of "econ" and human behaviours. Text version below.
Figure 12 - Text version

A comparison of 'econ' versus human behaviour. The concept of "Econ" of behaviour has the following charcteristics: well-defined preferences, makes decisions to maximize all alternatives, makes rational actions, and pursues monetary weath. In comparison human behaviour has the following characteristics: not sure of preferences, often picks the easiest route (i.e., satisfices), is subject to guilt, fairness, social comparison, and has the desire for luxury.

To illustrate this point, he cited his research on credit card payments. He said credit card statements only give people two options: pay the minimum requirement or the full balance. So people tend to choose one or the other. Few people pay somewhere in-between. The reason: people have busy lives and limited attention spans and therefore take the easier route in decision-making. The rational “econs” of economic theory wouldn’t do this; they would calculate and pay exactly how much they can afford.

In one experiment that Dr. Soman cited, people were given 4 instead of 2 repayment options on a credit card statement. Results showed that simply giving people more options increased the likelihood that they pay back more than just the minimum amount.

“The utility that people get from psychological factors is often greater than the utility they get from money. They will do things that are easier or psychologically more pleasing over things that save them money.”

Dilip Soman, PhD

The importance of repayment strategy in debt repayment

When it comes to paying off debt, focusing on one small repayment goal helps people feel they are making greater progress, and motivates them to tackle their big goal of repaying their debt.

This was the key finding shared by Dr. Keri Kettle of the University of Manitoba, who presented research on the behavioural effect of different strategies used to repay debt. Dr. Kettle and his research team analyzed credit card repayment data (from HelloWallet, a web and mobile application) and conducted several follow-up experiments to better understand whether different repayment strategies can motivate people to pay off their debt faster.

Consumers with multiple debts can use either a more “dispersed” strategy (spreading their payments equally across all debt) or a more “concentrated” approach (focusing most of their payments on one debt).

Through their studies, the researchers found that both repayment strategies are common among financial consumers, with a dispersed strategy slightly more common. However, the use of a more concentrated strategy was more motivating, and led to greater debt repayment in the following month. Said Dr. Kettle: “Concentrating payments on one small repayment goal makes each individual payment feel like a bigger step toward getting out of debt. So, you feel like you’re making greater progress, which is motivating. This works especially well when paying smaller debts, because the sub-goal is more proximate.”

He drew an analogy to running a marathon. “You have a long-term goal of finishing the race or have a certain time you’re desiring. But that's a long way off, so instead you might focus on sub-goals – finish the first mile or finish the first mile in five minutes. And these sub-goals work because they are closer and easier to attain, and every step you take towards those sub-goals feels larger as a result.”

“Sub-goals motivate people to attain their ultimate goal.”

Keri Kettle, PhD

Read Kettle, Trudel, Blanchard and Häubl’s research report “Repayment Concentration and Consumer Motivation to Get Out of Debt.”

The role of financial confidence

According to Dr. Scott Rick of the University of Michigan, debt aversion is common. Many people tend to delay or ignore paying off daunting debts. Inspired by prior research that suggested financial confidence can often be a driver in getting consumers to act more boldly, Dr. Rick and his colleagues tested this in an experiment: Does boosting financial confidence improve debt management?

In the project, individuals were randomly assigned to receive a boost in confidence in the form of positive messages. Through a computer simulation exercise, participants faced 6 debts of varying amounts from $3,000 to $60,000, with escalating interesting rates (from 2.5% to 4%). Each participant was given $5,000 and asked to allocate it to repayment. Those in the confidence boost group received encouraging messaging based on how they answered a series of financial questions. Those who didn’t get a boost didn’t get any positive messaging.

The result? “People who received the confidence boost allocated significantly more dollars to the most intimidating debt,” said Dr. Rick. Individuals with low financial confidence who didn’t receive the positive messages ended up with significantly more debt over the long run than individuals with higher financial confidence.

Another study explored whether the same outcome applied for couples, since many sizeable debts in life (such as mortgages) are jointly held with others. The experiment involved the same game but with more rounds, and financial confidence was measured before the experiment and again 10 months later. The findings showed that when faced with joint debt management decisions, couples defer to the partner with higher financial confidence.

“While couple members differ in their financial confidence, they seem to be letting the person with high confidence take the lead, navigate the process and they are benefitting from doing so. The couples, on average, look like individuals with high financial confidence,” concluded Dr. Rick.

“In terms of consumer education, we would suggest you want to cultivate both financial literacy and confidence. We see in our research there are a lot of people with high literacy and low confidence, so we really want to enhance both and this should help people juggle their debts.”

Scott Rick, PhD

Read Olson and Rick’s research paper “Managing Debt and Managing Each Other: The Interpersonal Dynamics of Joint Financial Decisions.”

Guiding behaviour through clearer expectations

Further strengthening the argument that understanding how people make decisions (their psychological biases and processes) is essential to designing effective programs and interventions, Dr. Nicole Robitaille of Queen’s University shared insights based on experiments conducted by her and her colleagues.

In one study, her team examined 85,000 organizations that were late paying their taxes. The researchers wanted to test if defining clearer “implementation intentions” would improve tax filing. They drafted an experimental letter that was different from the original letter. It included a specific “plan” outlining how, when and where to file, even though this information was already known by the organizations. The study randomized the letters so that organizations either received the experimental letter or the original letter.

The findings showed that just putting the information into a plan led firms to file significantly faster (5.3 days fewer on average; see Figure 13). As a result, the government collected hundreds of thousands of tax dollars earlier than it might have otherwise. This experiment was conducted over multiple years with the same results.

Figure 13: Defining clearer “implementation intentions” to improve tax filing - Results

The results of defining clearer "implementation intentions" to improve tax filing. Text version below.
Figure 13 - Text version

The results of defining clearer "implementation intentions" to improve tax filing are depicted, showing the percent of organizations filing annual Employer Health Tax returns on the vertical axis and the days after the late-notice letter was posted on the horizontal axis. Two trend lines are displayed - one for organizations that received the experimental letter and one for organizations that received the control letter. The difference between these two trend lines shows that, on average, organizations that received the experimental letter took 5.3 fewer days to file the tax return and that the experimental letter resulted in 16 weeks of additional collections efforts before the impact of the letter was eroded. This resulted in hundreds of thousands of dollars collected and thousands of dollars in savings.

Dr. Robitaille said these prompts “proved incredibly effective not only in getting people to act but getting people to act now.”

In a second study, the research team was interested to learn how consumers could maintain progress and keep the momentum going when they have made progress towards their goals. She explained that people often get sidetracked: “Lots of research shows that once we’ve achieved progress, for example we have paid down our debts, there is a ‘licensing effect.’ People feel as if they have done good, and so have earned the ability to spend. How can we mitigate this effect?”

According to Dr. Robitaille, a feeling of “closure” can help people feel “an experience is complete and part of the past” and is therefore less likely to guide subsequent behaviour.

In one experiment she showed that when participants think about their good deeds, they were significantly more likely to act in a selfish and indulgent manner. But when they engaged in an act of closure, this effect goes away.

The conclusion: If this lesson on closure can be applied to progress in paying off debts, consumers will feel a sense of completion and are more likely to move forward. Additionally, paying down debt is a high-level goal for most consumers to grasp, so having sub-goals helps. But there still needs to be a specific plan to achieve these sub-goals (how and when) or else “life gets in the way,” said Dr. Robitaille.

“We don’t just need to think about debt repayment strategies per se. We also need to think about the ways in which people make decisions, when they make their decisions, how they feel about the progress they’ve made and use these things to help design better strategies to help people pay down their household debts.”

Nicole Robitaille, PhD

Read the Research Brief “At Tax Time, A Little Nudge Goes a Long Way.”

Read House, Robitaille, and Mazar’s research paper “Effectiveness of Repeated Implementation Intention-Interventions on Organizations’ Likelihood to File Their Overdue Taxes.”

Read more about Dr. Nicole Robitaille’s research.

Day 2, Session 1: Showcase - application of financial literacy research

To optimize its value, research must inform action. And to do that, it must be connected to practitioners and policy-makers in meaningful ways. That link is absolutely essential.

During this plenary, presenters shared concrete examples of how they have integrated research findings into their programs and services, demonstrating how research and practice can be intertwined and build off each other to deliver better outcomes. It is this process that enables the interconnected, constant evolution of study and practice.

FCAC’s use of financial literacy research

Bruno Lévesque (moderator), FCAC

Bruno Lévesque, Financial Consumer Agency of Canada


Watch "FCAC’s use of financial literacy research" video.

“Research is key to inform: to find gaps and fill gaps,” said Bruno Lévesque of FCAC. He added that research is also important to evaluate how interventions affect people, so these lessons can feed into improvements, different interventions or even additional studies.

There’s been a significant amount of research in recent years related to financial literacy and well-being, which is being used to both better understand and improve the financial literacy of Canadians. As the federal Agency at the centre of the financial literacy movement in Canada, FCAC has been instrumental in catalyzing that research through the National Research Plan for Financial Literacy 2016-2018. Mr. Lévesque explained that research is central to FCAC’s dual mandate of financial literacy and consumer protection.

Having an integrated structure allows the Agency to engage in both research and interventions and to benefit from what they learn from each. The National Strategy for Financial Literacy-Count me in Canada is an example of this process.

The strategy was developed through comprehensive research that included consultations with Canadians and practitioners and an analysis of the Canadian Financial Capability Survey. FCAC dissected extensive empirical evidence to pinpoint both topics and groups on which to base the strategy. Based on this work, FCAC identified key focus areas, one of which was budgeting. Fewer than 50% of Canadian households at the time were budgeting, yet those who did budget tended to stick to it.

“Changing hats from research to financial literacy interventions, what we started focusing on is how do we get Canadians to budget more and put things in a way that makes sense for them,” said Mr. Lévesque. Informed by the research, the Agency developed financial literacy tools for Canadians and piloted a mobile app that enables FCAC to disseminate financial education messages. These initiatives have seen highly successful results to date, and FCAC continues to fine-tune and expand its consumer education and tools based on behavioural insights.

“Evaluation is part of the picture because we need to understand how our research and interventions impact the population, and then the findings should feed back to more interventions and more research.”

Bruno Lévesque

Motivating tax filers to save their refunds

Dean Estrella of Momentum discussed a pilot program his organization launched, in partnership with ATB Financial and the Aspire Calgary Collaborative, in 2018 called “Tax Time Savings.” It was designed to motivate low-income people, most of whom lack emergency savings, to save a portion of their tax refund. The Calgary-based, non-profit group works with people on low-incomes, providing ways to improve financial literacy and well-being through a focus on savings.

How does the program work? The team at Momentum was inspired by the Save USA model, a similar program piloted in 4 American cities that has generated great results in motivating tax filers with low incomes to save. Currently offered through 3 local agencies, participants attend a free tax clinic and file their taxes. Depending on the size of their tax refund, participants are encouraged to put between $200 and $1000 of it into a savings account. Participants who leave the full amount in the account for 12 months earn a 50% match rate, up to $500.

“There are two different savings milestones because we wanted people to have the opportunity to keep saving,” said Mr. Estrella. “If people want to access their money, they’re able to, but risk losing the matching dollars.” Additionally, participants who attend 5 financial education classes receive an extra $100. Participants always have access to the savings, with no risk of penalties, and savings can be used for anything.

“It’s a pretty simple matched savings program. We’re providing a lot of nudging through emails, texts and one-on-one instances to talk about what they could potentially do with that money at the end of the year so they use it wisely.”

Early pilot results of the Tax Time Savings initiative are promising. Of 173 registrants, 72% are following through, with a total of more than $130,000 saved (see Figure 14).

Figure 14: Tax Time Savings Program – Pilot results to date

Evaluation and mid-point results for the Tax Time Savings Program. Text version below.
Figure 14 - Text version

The evaluation and mid-point results for the Tax Time Savings program are depicted. The figure states that there were 173 registrants, that there was a 72% follow through rate, that 97% saved a minimum balance of $200, that there was a 46% overall balance increase in savings between June and October, and that 125 Savers managed to save a total of $130,872.

Mr. Estrella also highlighted some interesting research findings from another American project called “Refund to Savings,” which could be leveraged in Canada. That project is using savings nudges and options to help guide low- to moderate-income households in saving more of their tax refunds.

Read more about the Tax Time Savings Program.

Read more about SaveUSA.

Read more about Refund to Savings (R2S).

Removing barriers for low-income people

Steve Vanderherberg of WoodGreen provided examples of how his organization, one of the largest income tax clinic providers in Toronto for low-income people, is leveraging behavioural research to scale up their financial empowerment work and reach. In particular, he cited the insights of Ideas42 as a key inspiration; this non-profit firm has done behavioural analyses and experiments to better understand and address complex social problems such as chronic scarcity. Lessons arising from their work include removing barriers for low-income people, making services timely and efficient, and creating positive social interactions where people feel supported.

Mr. Vanderherberg highlighted WoodGreen’s new technology feasibility study (released a few days after the symposium), which was conducted to explore ways of providing financial services to marginalized populations and those who are immobile, isolated or otherwise facing barriers (see Figure 15).

Figure 15: Technology feasibility study recently released by WoodGreen

Technology feasibility study recently released by WoodGreen as described in the paragraph above.

The researchers found that through remote technology and coordinated services approaches, improvements can be made in accessibility, efficiencies and ultimately client impact. He observed that “these clients are very interested in using tech to access services and there are viable options that would really improve access and the way we work with people. When we went into it, we didn’t fully know that and the supports they needed to move forward around their financial lives.”

WoodGreen is also harnessing research insights to tackle one of its operational challenges: a high no-show rate where people book but do not attend free tax-clinic appointments. Research trials in America involving a volunteer income tax program have shown sending people “text prompts” or a series of reminders increases the likelihood of them showing up. To integrate the research into WoodGreen, the organization led a trial in 2018 using the same model to see if texts make a difference in lowering no-show rates. The results were positive and a second phase of experiments will be conducted in 2019.

Personalization and gamification can improve investment behaviour

Doug Sarro of the Ontario Securities Commission (OSC) discussed how research is shaping its investor engagement and outreach efforts. One example is the OSC’s website Get smarter about money. It’s one of the country’s most visited financial literacy websites. Continual monitoring of web usage and traffic data helps the organization improve and adapt its content to changing user needs and realities.

Mr. Sarro said OSC is always trying new ways of delivering content to readers. Last year, the OSC conducted 2 behavioural insights research projects. The first focused on how OSC can help older Ontarians plan for retirement. The other focused on how to better engage millennials in investing.

Despite different focus areas, the research revealed some common themes, one of which was that personalization can help elevate engagement. “People don’t want resources pushed to them in the abstract,” explained Mr. Sarro. “They want the resources to be designed in a way that feels like ‘it’s for me.’” Research shows gamification is another effective tactic.

These 2 themes play out too in OSC’s web traffic data: Among the most visited resources are interactive tools and calculators, which have elements of personalization and gamification built into them.

To further engage people and make financial concepts more relevant as they invest, the OSC developed an Investor Personality Quiz that draws on the research (see Figure 16). The quiz is designed to “get people thinking, not to reach a scientific diagnosis.” Based on quiz responses, people are assigned to 1 of 4 personality types. These profiles are designed to help people understand their investing approach and risk tolerance and will direct them to relevant resources they might find useful.

Figure 16: OSC Investor Personality Quiz

Screenshot of the OSC Investor Personality Quiz as referred to two paragraphs above.

“People are overwhelmed by information on their finances. And because of the way the world is today, people are more responsible for their own financial futures than ever before. So how can we use personalization and gamification to help take some of the onus off people to find the resources they need for their financial futures?”

Douglas Sarro

Read more about the Ontario Security Commission’s Investor Personality Quiz.

Investing spare change

Introducing his presentation, Philip Barrar of Mylo said saving and investing are among the biggest challenges Canadians face. That was the impetus for Mylo, a financial app launched in July 2017. It was designed after extensive research and lets users benefit from an automated savings and investment service.

Mr. Barrar explained how Mylo works. Users download the application, connect it to their bank account and keep spending as they normally would. For every purchase made, Mylo rounds it up to the nearest dollar and invests the spare change. The account is fully managed on the user’s behalf, and the only cost is a flat $1/month technology fee.

According to Mr. Barrar, millennials have responded really well to the product, because it helps them save and invest with minimal effort or changes to their behaviour. At the time of this presentation, over 90,000 Canadians are using the platform.

A major benefit of the technology is that it gives Canadians “the opportunity to improve their financial lives. We’ve already seen the financial situations of many of our users improve right after downloading Mylo. After all, our average user will save over $1,000 in a year through using round-ups and simple recurring deposits.”

In November 2018, Mylo’s database had over 70 million transactional data points, from insurance payments to coffee purchases. “That’s growing exponentially every single day,” he said. This allows the company to paint a very detailed picture of each user and what they’re trying to achieve in terms of savings and goals, among other things.

“We know [Mylo] users need help improving their financial literacy. Our Know Your Customer (KYC) data tells us 82% of our users have no investment knowledge. But how do we improve that? We’re using this data to inform our editorial choices” (see Figure 17).

Figure 17: Investment knowledge of Mylo users

Investment knowledge of Mylo users. Text version below.
Figure 17 - Text version
  Novice Nothing Knowledgeable Expert
Proportion of women 42% 50% 7% 1%
Proportion of men 49% 28% 19% 4%

For example, he said 28% of users have a travel goal and knowing this helps the company advise them of “tips and tricks” to save money when they’re planning and taking holidays. The company has also used data to publish helpful insights, such as a report released last year on the investment habits of men and women.

Reinforcing the importance of research-driven practice, Mr. Barrar wrapped up by saying ongoing research is helping Mylo evolve. The company uses different data sources, including financial transactional data, demographic information, customer surveys and third party research, to develop its product and strategies.

“The new incoming data is always going back into the process…cycling through that again lets us make continuous improvements.”

Philip Barrar

Read more about the Mylo app.

Read the article “The Investing Habits of Canadian Women and Men: A Data Analysis of Mylo Users.”

Day 2, Session 2: Debate - innovations in financial services are a boon for financial inclusion

From crypto-currencies and digital payments to peer-to-peer lending, financial service innovations have proliferated in recent times. But for financial consumers, are such innovations a boon or a bust? In particular, do they level the playing field for the vulnerable or disadvantaged people in society? This armchair discussion presented both sides of this issue in a friendly debate.

Understanding the nuances

Dr. Dilip Soman (moderator), University of Toronto

Dilip Soman PhD, University of Toronto


Introducing what he called “the first-ever financial literacy debate” at a Canadian conference, Dr. Dilip Soman framed this session by quoting French philosopher Joseph Joubert: “It is better to debate a question without settling it than to settle a question without debating it.”

Dr. Soman said people often take positions on issues “without really understanding the nuances of the position, and that’s the goal here: to get into a nuanced discussion.” He outlined the rules of the debate, with the two proponents and the two opponents having time to present their arguments and make rebuttals. He also noted the participants were assigned to their position for the purposes of the discussion, so arguments presented should not be seen as reflective of their personal view but rather the role they had been assigned to.

Innovation is a boon for financial inclusion: the proponents

Dr. Nicole Robitaille, Queen's University

Nicole Robitaille, PhD, Queen's University

Preet Banerjee, Independent consultant and columnist

Preet Banerjee, Independent consultant and columnist

Leading off the “boon” side of the debate, Dr. Nicole Robitaille argued that for the unbanked and underbanked, innovations are key to increasing access to useful and affordable financial products and services.

Innovations also facilitate inclusion by making financial tasks simpler for people: “The more complicated it is, the less likely they are to do it. So, innovation gives us an opportunity to make it easy. And it can do this in a number of ways,” she argued.

To illustrate this point, she cited choice architecture and defaults such as auto-enrolment in retirement plans as examples of hugely successful innovations that have boosted savings for retirement. She added: “nudges and giving people information at the point they are making decisions like short videos allows them to make better decisions.”

Another value of innovation is that you can harness behavioural insights on how people make decisions to “personalize products for those in need,” thereby creating better, more inclusive offerings, she said.

Preet Banerjee cited innovations over time that, in his view, demonstrate financial innovation has certainly increased inclusion. He pointed to the development of “Chit funds” in India over 200 years ago to help rural individuals and small businesses. Money is pooled into a single fund and each month one recipient receives the designated chit prize. Over time, everyone participating will eventually receive the prize. These creative savings and credit instruments still exist today, giving people access to money they would otherwise not have.

He noted a digital innovation designed for the 45 million Americans using the country’s food stamp program. A company called Propel is providing people with a digital way to access their benefits and planning tools to view their food stamp allotment. A recent study found people who used Propel had “one fewer day of extreme hunger because they were better able to manage their food stamp allotment.”

Mr. Banerjee also highlighted a successful technology initiative first created in Kenya over a decade ago to help the unbanked. Called M-Pesa, the service allows people to use a mobile device to deposit, withdraw and transfer money as well as pay for purchases. The service has since expanded to other developing countries and has been applauded for increasing financial inclusion, helping millions of people access basic financial services and improve their lives.

He concluded: “So there are varying types of financial inclusion and, historically, if you look at the impact and the number of people who have been lifted out of extreme poverty because of financial innovation, absolutely it is a boon for inclusion.”

Innovation is a boon for financial inclusion: the opponents

Dr. Avni Shah, University of Toronto

Avni Shah, PhD, University of Toronto

Doug Steiner, Evree

Doug Steiner, Evree

On the other side of the debate, Dr. Avni Shah asked the audience to consider the meaning of financial inclusion. She argued that it implies benefits to all people, “not just the top 2%,” and questioned whether certain innovations deemed successful have, in reality, been a positive or negative for all people. In the view that she portrayed, it’s the latter, and to illustrate she listed examples of products and services that have proved advantageous for wealthier individuals and families to the exclusion of others.

Dr. Shah argued that many modern investments such as credit default swapsFootnote 2 were designed to benefit investors with money seeking to mitigate their financial risks. She maintained such complicated and risky investments were behind the financial crisis of 2008-2009. “Keep in mind, those investors – a lot of them have rebounded just fine. How about those that were left in the dust?”

Dr. Shah also contended that innovations such as chequeing accounts haven’t served the many people who are unbanked or underbanked too well, and have led to the rise of payday loans and other predatory services.

“Innovation has fostered ‘financial exclusion.’ What you see in all these different examples is that it really helps people who are smart, who are financially literate and know they can play the game and earn money.”

On the same side of the argument, Doug Steiner asserted that in his 30 years of working in the area of financial innovation, it hasn’t been a boon for “all actors in the financial economy.” Augmenting the financial exclusion point put forth by Dr. Shah, he argued innovation has really benefited the wealthy and most resilient consumers in Canada: “If you are financially savvy, there are innovations that have helped you. But it has come at an enormous expense to others.”

He discussed credit cards as one example. If you have money, these are a boon and allow you to leverage credit, he argued. But there are 10 million credit cards in Canada with outstanding balances, illustrating that Canadians may have easy access to credit but at significant expense when you add up all the interest charges and fees on this debt.

In closing, the participants converged to the point of view which said that a) innovation that is “bottom-up” and tries to solve a genuine user problem can definitely promote financial inclusion, but b) there is still a lot more potential for innovation to contribute to the financial well-being and inclusion of Canadians.

Concluding remarks by symposium hosts

Dr. Dilip Soman, Behavioural Economics in Action at Rotman, University of Toronto

“The challenge is we have made the financial landscape so unhuman that even the best humans struggle in it. Really intelligent people mess up. Just as people need financial literacy, maybe the financial industry needs a bit of human literacy as well. Organizations spend so much time, energy and effort in compliance with the law. Where’s the compliance with human behaviour? So, we need to think long and hard about the landscape… in addition to simply educating people on how to make better decisions.”

Dilip Soman, PhD, Director, Behavioural Economics in Action at Rotman, University of Toronto

Jane Rooney, Financial Literacy Leader, FCAC

“I truly believe this event helped us advance our shared financial literacy journey by continuing to build a bridge between researchers, practitioners, policy makers and others on the front line. Information sharing is key. There are two big conclusions that I’ve drawn from this event: First, the quality and amount of research in the financial literacy field has continued to grow. The second big theme is the influence of researchers is having an impact, providing us with really important information…and helping us push the boundaries of financial literacy.”

Jane Rooney, Financial Literacy Leader, FCAC


FCAC would like to acknowledge the excellent work of the large number of Agency staff who worked on the development and implementation of the National Research Symposium. In particular, we would like to thank the following members of the Research and Policy team: Rebecca Kong, Marcie McLean-McKay, Nicole Rivest, Chris Poole, Emilyn Shojaei, Fabia Rahman, Mathieu Saindon and Steve Trites. FCAC would also like to acknowledge the contributions of Holly Bridges, Carolle Beaubien, and Richard Gélinas. Of course, this symposium would not have been possible without the steadfast support of the Financial Literacy Leader of Canada, Jane Rooney and FCAC’s Commissioner, Lucie Tedesco.

FCAC would also like to acknowledge Dilip Soman and his colleagues at Behavioural Economics in Action at Rotman (BEAR) for their tremendous support in co-hosting this event. In particular, we would like to thank Liz Kang, for all of her work behind-the-scenes to make the event happen. We would also like to thank the Research Sub-Committee members for their contributions in selecting topics and moderating the panels. The Research Sub-Committee includes Bruno Lévesque as the Chair, Jerry Buckland, Karen Duncan, Andrea Hasler, Jodi Letkiewicz, Allison Meserve, Pierre-Carl Michaud, Nicole Robitaille, David Rothwell, Bettina Schneider, Dilip Soman, Brenda Spotton Visano, and Jiaying Zhao.

FCAC would also like recognize the important contributions of Kelley Keehn who facilitated the symposium as the Master of Ceremonies and Ralph Frustaglio who provided communications expertise including preparing this post-symposium report.


Poster presentations

Delegates had an opportunity to view 11 poster presentations at the symposium. The posters gave participants an additional opportunity to learn about some of the research findings. Representatives from the exhibiting organizations were on hand to discuss their research and answer questions.

People attending a poster session at the 2018 Research Symposium.

Poster title and presenter

A Long-Term Comparison of Consumer Debt Relief Options in Canada

Patricia White and Jodi Letkiewicz, PhD, Credit Counselling Canada

MoneyFit Challenge Evaluation: Financial Literacy Knowledge, Attitude and Behaviour Change

Karene Nettel, Best Life Rewarded, Inc

Financial Empowerment: Personal Finance for Indigenous People

Bettina Schneider, PhD, First Nations University

Payroll as a Financial Wellness Solution

Janice MacLellan, Canadian Payroll Association

Focusing on the Financial Health and Resilience of Canadians

Eloise Duncan, Seymour Consulting

Carrot’s Financial Road Map

Lauren White, MSc, and Megan Nobrega, Carrot Rewards

The Relationship Between Budgeting and Financial Well-Being

Nicole Rivest, FCAC

The Building Blocks of Financial Capability in the UK

Nick Watkins, Money Advice Service

The Impact of Direct Giving for People Experiencing Homelessness

Ryan Dwyer, University of British Columbia

How Canadians Feel About Their Money

Doretta Thompson, Chartered Professional Accountants Canada

Home Equity Lines of Credit: Consumer Knowledge and Behaviour

Christopher Poole, FCAC

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