What the people want.
I have started out today’s reading with a very interesting article: Academic Discipline and Personal Finance Instruction in High School by Cazilia Loibl and Patti Fisher.
“Public opinion has embraced the idea that personal finance instruction in high school is key to alleviating consumer indebtedness, financial delinquency, and bankruptcy…The academic literature, however, is inconclusive regarding the effects of high school financial education on financial decisions and behaviours” (Bernanke 2011; Bernard 2010 as per Loibl & Fisher 2013).
I am feeling as though this is a good time to be exploring the effectiveness of finance education as the implementation of mandatory personal finance and economics education in both the U.S. and Ontario is sure to produce interest and new research. I got the impression when I met with my cooperating professor that there may be some conflicting research on whether or not personal finance education actually has the desired outcome of reducing debt, bankruptcy rates, and leads to overall better financial decision making. This is the first article I am exploring that is confirming that.
The article suggests that there is a difference between the goals of the public mandate and how the instruction is actually being implemented. Often the implementation is unfunded, not a part of the core curriculum, and vague as to which curriculum or academic department it fits under. There is a large variety of ways in which finance education is being offered, which may explain some of the discrepancies in the research on its effectiveness. As a practicing teacher I know that if a mandate is put on everyone’s shoulders, no one will feel the need to be accountable for it. The article points out that a “groundbreaking study by Bernheim, Garrett, and Maki (2001) reported positive effects on savings behaviour and asset building among young adults receiving financial literacy education in high school” but that “other studies found no (Cole & Shastry, 2010; Mandekk, 2005; Tennyson & Nguyen, 2001) or negative relationships between high school financial education and financial behaviours (Peng, 2008; Peng, Bartholomae, Fox, & Cravener, 2007)”.
The article goes on to talk about 5 dimensions describing academic disciplines’ approaches to teaching high school subjects: definition, scope, status, sequence and dynamic. Subject definition refers to how well defined a subject is in terms of what is taught in the course. Personal finance is a subject with a broad definition and great variation of content- often dependent on the academic department responsible for teaching the content. Scope refers to the number of disciplinary areas associated with a course; for personal finance this can include economics, marketing, psychology, social studies, family studies and more. The third dimension, Status, refers to how valued a course is by the school community, which can influence funding and whether content is included in standardized testing and core curriculum. The fourth dimension is sequentiality. Personal finance is a course with low sequentiality, meaning that there aren’t a lot of the topics that need to be taught in a certain order. The fifth and final dimension is subject dynamic- or how much a subject changes, creating a continuous need to stay updated. Being a course based on modern society and behaviours, personal finance topics are highly dynamic. I think that a wide range in scope and subject definition combined with low status in schools makes financial literacy content difficult to deal with from an administration perspective.
The article goes on to look at differences in personal finance education dependent on the subject area it is taught under: business education, family and consumer sciences, or social studies/economics. Summaries of the educators, their experience, and how they offer their courses is found in the table (taken from the article) below.
Some of the challenges reported by teachers that completed the survey included not enough resources, a lack of funding, dealing with administration, student interest, and competing with other electives. I found the research interesting as it identified gender and education differences between the teachers in the different academic disciplines and these can be connected to the content offered within the course differences. “Telling is the finding that the mostly female, older, lower educated family and consumer sciences teachers were more hesitant to teach investing content that other personal finance content” (Loibl & Fisher, 2013).
When I started thinking about the need for personal finance education in secondary schools I had in my mind that it would either fit as a stand-alone class or as part of the Math curriculum. I have learned that Math doesn’t ever seem to be the home for these skills. I am feeling a bit like the personal finance topics may lose their status if they are tucked into other courses and taught by non-finance trained teachers. I think this is an important point addressed in the article- that the “gap between the goal of the mandate and its implementation may undermine the anticipated outcome” (Loibl & Fisher, 2013).
Do I think that efforts to teach finance skills in secondary schools need to be abandoned due to research suggesting it is not effective? No. I think it is a sign that we need to look at HOW it is being offered and make the necessary changes to give the content the important status it deserves.
“An investment in knowledge pays the best interest” –Benjamin Franklin