


Teacher, leave them kids alone

Financial education has had disappointing results in the past

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There is little evidence that financial education would help the situation because it is all the "highly educated" politicians that have gotten us in the horrendous financial mess that we are in as a country. And it was the bankers, I assume they had some financial education, that took our country to the brink of financial collapse not to long ago. So maybe what we need is a course in common sense, ethics, morality, and humility. Seems like the financial education route isn't working.


Perhaps the people surveyed are taking into account bank fees. My bank, for example, would confiscate the entire sum on the grounds that the account is inactive. Others would charge a small-balance service fee which, over five years, would accomplish the same thing.

The respondents would be realistic to expect that they'll somehow get -- well, let's say taken advantage of.


There is no such thing as the "British" national curriculum! Why are the words "English" and "British" so confusing for the Economist?

Jatinder HANDOO Mumbai

The article seems emanating confusing signals about a very sensitive and important tool of empowerment -financial literacy (FL) and thus painting it negative. At the outset let me share with the eminent readers about the evidence piece which clearly shows that Financial Literacy is useful and helps. Evidence is a World Bank evaluation study of a financial literacy Programme in India run by one of the world's largest branchless banking institutions - FINO PayTech Ltd which delivers financial services to kore than 56 million poor , previously un(der) banked populations predominately in the remotest areas of India.

Furthermore what is not clear from the article if FL methodology is an issue or basic mathematics ability of general masses in the United States. Even if one assumes both or either one as an issue , even then it does not co-relate with the 'no impact of FL' . To keep it short, It seems the article is biased and I encourage readers to go through a Randomized Controlled Trial in India and evidence generated from the Field : http://www.centre-for-microfinance.org/wp-content/uploads/attachments/cs....



Perhaps my logic is wrong, but it seems to me that if 50% got the right answer, then only 25% worked it out correctly. The other 75% had a one in three chance of getting it right, making a total of 50%. Somehow seems too easy, though.


It isn't so surprising that a survey of Americans should reveal that very few have even the most rudimentary ability to perform simple arithmetic. I've lived in the USA for 22+ years and in all that time, only one person has ever mentally calculated the correct change for a $20 bill when I've paid cash for a small item - and that person was a female student from Poland. Americans "don't do math" which is why the vast majority of postgraduate students for any of the "hard" subjects are uniformly not "whitebread" Americans. So the problem isn't per se financial literacy but rudimentary numeracy, and it's a problem the USA has labored under for generations. The problem may not be as prevalent elsewhere in the OECD and so one should not rush to draw general conclusions from studies that are based in a country that is notoriously inept when it comes to "doing the numbers."

Zen Novice in reply to CA-Oxonian

"Preposterous" leaps to mind when reading your fantastic philippic: '22+ years in the USA'? Where? Swan Islands? Naushon Island?
But I do applaud your recognition of the Poles; on the other side of the Atlantic, day by day as they join us they are raising the average English IQ

Enders Shadow in reply to Zen Novice

Don't confuse IQ with knowledge. Yes, Poles tend to be far better educated - but that's little to do with IQ; there's a nasty anti-learning strand in English teenage culture, which combined with lots of other problems in the school system make it easy to be critical.

Zen Novice in reply to Enders Shadow

You are right, of course. I was alluding to (then-Prime Minister of New Zealand)'Piggy' Muldoon's retort to the criticism that his economic policies were driving Kiwis to move across the Tasman, to live in Austalia: "Well, it raises the IQ of both countries."

Kapish Kaushal

Well, I have no doubt that there is lack of financial education among people today. I read this book by Robert Kiyosaki "Rich Dad Poor Dad" in my school days and that really told me the importance of getting financially literate. Since then, I have read quite a few of his books. I recommend that to anyone who is interested in better management of his/her money.

A. Andros

A few years ago I was asked to teach an Economics course to junior and senior high-school students. The school had never before offered such a course and so I had a blank sheet of paper. I found a not-too-difficult text (written for the community college level) and set up shop.
Four years later and the course is packed -- we now have two sections. (It is an elective.) Discussion among the students is vigorous and occasionally passionate.
The course opens with several weeks on "real life items:" credit card perils, auto insurance, family budgets, the 1040, one's credit score (not a single student had, of course, heard of FICO) and then moves on to theory, e.g. command vs. market economies, STUDENT LOANS AND COLLEGE FINANCING, transfer payments . . .that sort of thing.
The real "fun" for the students comes with equities vs. debt as investments, retirement planning, wealth accumulation, tax planning, small business operation and so on. But, they also are awed by how the Fed operates and become quite vociferous over tax theory.
On the first day of class I describe my goal: "This course is designed to prevent you from being one of those young adults who sleep on a roll-away under their parents' basement stairs because they don't know how to plan." Then, I show them Gordon Gekko's "Greed is good speech."
This is a cheap course to teach: no lab and no special equipment or field trips. Using the digital projector we start every day with a review of news in the WSJ. The kids seem to love it.
Part of the fun is that I spent most of my life in the NYC financial district. Thus, I can lace my teaching with anecdotes. But, any recent college grad who majored in Economics could teach the course -- assuming, of course, s/he knows how to teach.
It is a good use of taxpayer/tuition money, in my opinion. Students become aware of everything from the need to fund their own retirements to why they should regard payday loans and certain rent-to-own catalogs as loathsome diseases.
But, word of advice . . . DON'T give this course to the school civics teacher as an "add-on." Hire a teacher who actually knows the subject. It doesn't take long for the kids to spot when a teacher is one chapter ahead of them.

Derry Hannam in reply to A. Andros

I enjoyed this post and applaud A Andros for the work he/she is doing. The last comment is very apposite to the current English situation where the Andros advice is about to be ignored totally in the proposals for a new Citizenship curriculum. Financial Literacy has been added, as Burtonwood descibes, and experiential learning about democracy through 'participation and responsible action' has been removed - and who will teach financial literacy? You guessed it! The Civics teacher (or English equivalent - the citizenship teacher). It will be in one ear and out the other I predict - just like much of the rest on the new 'Gove' curriculum


Heh, an article about innumeracy, based on a reading comprehension fail. Can the next Buttonwood be about with is worse?


Elementary school is for the really useful stuff that most would never learn well on their own. Reading, writing, foreign languages, mathematics, sports, science, and how the land is governed. Everything else is a waste of precious time and resources.

Richard Hancock


Is it necessary to achieve an optimal portfolio mix? What about achieving a sub-optimal one that's good enough (or at the very least better than an arbitrary one)?

I disagree with you on the "right" answer being only known ex post. This is rather like saying you were foolish to buy buildings insurance for your home because it was never seriously damaged. Equally, a very risky investment might look like a wise investment, ex post, simply because the risk never materialised. The key, in my view, is to make the right decision ex ante and being prepared to live with the consequences (i.e. understanding the likely range of outcomes).


The kids will learn arithmetic if you do it with real money. They'll see to their accounts with great care when it's for real.

Fact Checkerz

This is complete nonsense.
I bet the author cannot understand numbers, or is too lazy to read the sources.
C. Percent Correct by Basic Financial Literacy Question and Socioeconomic Characteristics
1. Numeracy
(i) More than $102; (ii) Exactly $102; (iii) Less than $102; (iv) Do not know (DK); (v) Refuse.
Age > 50 (N=546)
Correct 92.9%

Deol in reply to Fact Checkerz

You're right.

"Only slightly over half (56%) got both answers correct" referred to 2 questions, no just the 1st one mentioned in the article:


This is still very poor, but it's not as bad as the article suggests.

Subgame Perfect

As a big proponent of financial literacy, these findings are really disappointing. However, I do believe there are groups, Innovations for Poverty action to name one, that are getting positive results from their financial assistance and education programs. One has to wonder about the quality of the financial literacy programs mentioned in the article.


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