‘Financial lit’ vs. ‘don’t buy what you can’t afford’
Georgia is making “financial literacy” a graduation requirement, reports Carmen Reinecke on CNBC. It’s the 13th state to mandate personal finance education. “In the last 12 months, Florida, Nebraska, Ohio and Rhode Island have passed similar laws.”
Concerns about students taking on heavy college debt have prompted the trend.
Fordham’s Daniel Buck is a skeptic.
The Federal Reserve has a comprehensive analysis of financial literacy interventions. Their top-line conclusion reads: “Improved financial behavior does not necessarily follow from financial information.” Other research confirms such lackluster results. . . . Financial security requires not just knowledge, but action, self-control, and life habits. Regarding physical health, we understand that a donut is unhealthy — this is common knowledge — but we choose to eat it anyway. “Don’t buy stuff you cannot afford” is not some abstruse dictum, a piece of occult knowledge waiting for instruction to reveal it.
There’s some evidence linking state-mandated financial ed curricula to “increased asset accumulation” in adulthood and a higher likelihood of having a bank account, writes Buck. But he’s not persuaded. “Personal habits, life experiences, and access to financial knowledge as an adult are far more important factors — all factors that schools cannot influence.”
In my newspaper days, I looked into whether mandatory sex education courses affected teenagers’ behavior. Again, there’s a big gap between adding knowledge and changing behavior. You can put the condom on the banana . . .
There’s not enough time in the school day to keep adding non-core mandates, Buck concludes. Schools “have been asked to solve every societal issue from racial disparities and drug abuse to obesity.” It’s too much.
Math teachers are being urged to get students to tackle “real-world problems.” Instead of apples, oranges and some poor guy rowing against the current, why not show students how to use math to calculate return on investment?