Basic Income, Financial Literacy and Financial Capability: How Do We Get Better Alignment?
Jennifer Robson & Robin Shaban (Carleton University)
In this paper, we describe the levels of financial literacy and financial capability of adults receiving Income Assistance (IA) benefits in British Columbia. We find that, even after controlling for the usual demographic characteristics, IA recipients have significantly lower levels of knowledge (on mainstream financial topics commonly used in tests of financial literacy) and lower levels of capability in some key areas of financial management. This is not evidence that IA clients need to be instructed on budgeting; in fact we find there is no significant difference between IA clients and other adults along this dimension. Instead, we find that IA programs likely inhibit the ability of clients to gain positive experiences in making their own financial decisions. We also draw on results of a survey of voluntary sector organizations that deliver a range of services to low-income clients, including tax-filing clinics, help accessing government benefits, financial coaching or problem-solving, and consumer rights education and advocacy. We find that organizations seem to be playing an important role in helping low-income adults navigate and access public benefits, but that this work is not properly considered in the total cost of current IA programs or other income supports. We also find that the non-profit supply of financial information and advice to low-income clients is likely precarious due to uncertain funding and competing organizational priorities.