Behavioral Economics in the Classroom: Teaching Students to Address Cognitive Biases in Financial Decision-Making, An Insight From Enugu, Nigeria.

Abstract

Financial education that transmits technical knowledge without confronting the cognitive architecture of choice leaves students exposed to predictable errors. This quasi-experimental study examined whether a six-week classroom module in behavioral economics reduces susceptibility to cognitive biases and improves the quality of financial decisions among undergraduates in Enugu, Nigeria. A purposive sample of 384 students from the University of Nigeria Enugu Campus and Enugu State University of Science and Technology was assigned to a behavioral-economics treatment (n = 192) or a conventional financial-literacy control (n = 192). After attrition, 362 complete cases were analyzed (treatment = 181; control = 181). Instruments measuring bias awareness, present bias, loss aversion, overconfidence, financial literacy, and financial-decision quality demonstrated acceptable internal consistency (Cronbach's α = .79–.88). Analysis of covariance controlling for pretest scores showed that the treatment produced large gains in bias awareness (F(1, 359) = 94.17, p < .001, ηp² = .208, Cohen's d = 1.26) and financial-decision quality (F(1, 359) = 61.48, p < .001, ηp² = .146, d = 0.98), and medium-to-large reductions in present bias (d = 0.74) and overconfidence (d = 0.69). Hierarchical regression indicated that posttest bias awareness and present-bias reduction jointly explained an additional 18.4% of the variance in decision quality beyond financial literacy and demographics (ΔR² = .184, p < .001). The findings support embedding dual-process and prospect-theory content in Nigerian university finance curricula.