Financial literacy rates have climbed at a “glacial pace,” according to Wharton finance professor and William H. Lawrence Professor Michael Roberts, to about 57 percent in the U.S. today. With the accessibility of artificial intelligence, one potential use for the technology is answering financial questions. In a conversation on Knowledge at Wharton’s Ripple Effect podcast, Roberts spoke to host Dan Loney about AI’s role in the classroom and whether it could replace a financial advisor. This interview has been edited and condensed.
Dan Loney: I would like to get your thoughts on where you think financial literacy is in general in our country and the world right now.
Michael Roberts: I think the trajectory of financial literacy has been positive over time, but at a somewhat glacial pace. It’s not improving quickly enough. And I think government policy and actions that we’ve seen over the last four or five years are a positive step forward but raise perhaps more questions and concerns than [they calm]. Who’s going to teach it? How’s it going to be taught? What’s going to be taught? There are a lot of challenges.
DL: If we’re moving at a glacial pace, artificial intelligence is moving about as fast as you possibly can. If AI is having impacts in all of these different areas, where does it potentially fit [into] financial literacy?
MR: Where it’s at right now is simply nowhere near where it needs to be in terms of a stand-alone investment advisor or a sort of financial guru for individuals. It takes a great deal of understanding of finance and an ability to prompt or engage with the AI to get meaningful answers out of it. When it does produce answers, they can be impressive, but they can also lead you astray. So how long before we get to a point where anyone can just talk to AI and have it solve their financial problems? I have no idea. But it’s not going to negate the importance of what I call financial proficiency.
I’ve been playing with AI for about two years, and I had students in one of my classes use it to solve an exam. It was in a different context, admittedly — more programming and data science. Nonetheless, it was a quick wake-up call. I’ve been feeding it questions — standard financial-literacy questions as well as questions from my exams. And it’s interesting. AI is financially literate by any measure, in practice. From that perspective, it’s impressive. But when you ask it questions such as, “How should I save for retirement?” or “What should I invest in?” — now, I’m sure there are regulations or restrictions on the AI becoming an unlicensed RIA, but it really doesn’t know where to begin. It provides a very broad overview. And so what I mean when I say I don’t know when it’s going to be ready to be our financial guru — I don’t know how quickly AI technology will progress to that point.
DL: But I think some people would wonder, with the fact that we know that financial-literacy education is important and the fact that it has been a hard thing to truly implement in schools in different portions of the country, whether or not at some point AI can be that vehicle to help teach along the way.
MR: There’s no reason we can’t have personal AI TAs for our classes now, or very soon. But there’s a difference between being a TA for a class and being someone who can answer specific individual personal or professional financial questions.
DL: I noticed that in the research you had done in and around AI, there are also instances where you rephrase some of the questions to try and see if there would be a better understanding for the generative AI tool ChatGPT.
MR: Absolutely. I had to learn how to communicate with the AI, in some sense, in order to give it the opportunity to get the right answer. And by the same token, I imagine the AI is learning how I’m communicating with it in order to give me the answer I’m looking for. I think it has the opportunity to accelerate our progress. But it won’t be a replacement for financial proficiency. It’s not just spitting out a number. It’s giving a somewhat long-winded explanation of the answer. So if you don’t understand what it’s returning, the information is not helpful. It’s not usable.
DL: But is the expectation that there is a level of development that we should expect from ChatGPT in this area — and in a lot of areas as we move forward?
MR: I think so. It’s progressing so quickly, it’s difficult to keep up with. And that’s why I say it’s hard to see a limitation, at least from my perspective, on what it’s going to be able to do. I don’t see it, at least currently, as a replacement for the progress we need to make on the literacy side.
DL: What has that research meant to your mindset around teaching finance and the component of having ChatGPT as a tool to use in that process?
MR: I’m incredibly excited. I take the view that ChatGPT and other gen-AI models are just a fantastic tool in the toolkit that we need for addressing financial challenges. So I embrace it. I encourage my students to embrace it. I want them to use it on tests or homework if they choose. But what they quickly learn is that if they’re going to use it, they can’t shirk on understanding the finance.
DL: How much do you think, in terms of the education piece, it has benefited your students?
MR: It depends. For data-science-related financial applications, when I teach my Data Science for Finance course, it’s hugely helpful, because it almost completely eliminates the technical burden in terms of programming and working with data. It’s made things so much more efficient. On the banking and personal-finance side, it’s a little less helpful, again, because it struggles with broad, almost open-ended questions. It varies based on application at this point.
DL: Is there anything that really surprised you about your interaction with ChatGPT AI as you’ve used it the last couple of years?
MR: Sometimes it gives impressively insightful responses. In fact, it actually found an error in one of the financial-literacy exams, which I thought was really impressive. On the other hand, it also impresses me in terms of some of the silly mistakes it makes. So that sort of volatility needs to be worked out. And I’m sure it will be as it learns through more interaction and data.
I think what’s critical is that I don’t see AI as just a panacea. I view it as a complement and an accelerant on our path toward financial literacy, whatever that may be, or financial proficiency. In other words, I think it’s going to be critical that people recognize that knowledge of finance and financial principles are not going to go away — that they’re going to be paramount in order to engage successfully with AI wherever it may be in the future.
Published as “Can AI Improve Financial Literacy?” in the Fall/Winter 2024 issue of Wharton Magazine.
