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Is Your School Churning Out Best-Selling Engineers in Five Languages? Didn’t Think So.

POSTED: April 28, 2014 | BY: Annamarie Cerreta | TAGS: , , , , , , , , , , , ,

April 28By Dan Kadlec, Author and Journalist.

In the era of Big Data, we can’t seem to tie our own shoes without first confirming the need through statistics. Yet some things are so big and so obvious we shouldn’t wait—like, say, stopping texting while driving or rebuilding our middle class.

Do we really need data to know that distracted drivers cause accidents? Isn’t it a given that a shrinking middle class is a drag on the economy? Financial education is like that too. Can anyone really argue against teaching money basics to kids who will come of age in a world with few financial safety nets?

Well, they do. Critics are all around. They point to the overwhelming marketing muscle of banks and brands, saying no amount of financial education can offset their message to borrow and buy. They argue that what kids learn about money in school is obsolete or forgotten by the time they are old enough to put the ideas into practice; that even when armed with the basics of budgeting and compound growth, human nature tilts so heavily toward instant gratification that any financial lessons are pointless. Without sure-fire proof to the contrary, we fail to take financial education seriously.

In this way, the parallels with texting and driving and with our shrinking middle class are striking. Start with texting. Yes, most states have restrictions—but not all of them, and many do not go far enough. Yet surfacing now is a wave of data-driven resistance that threatens further progress. Researchers at Texas A&M found that while legal restrictions curtail texting while driving, this does not reduce the rate of car accidents. Their theory: the benefits of fewer texting drivers are offset by the heightened danger of those drivers being extra sneaky to avoid being seen. With no proof of overall good, why ban texting at all?

Similarly, social scientists have been studying the widening income gap in the U.S. for at least two decades. It seems obvious that a shrinking middle class will keep growth below potential, and that for the rising number of have-nots health and education will suffer. That costs everyone. Yet the renowned Harvard professor Christopher Jencks has had such trouble producing the right data that he recently abandoned his 10-year effort to prove the ills of extreme income inequality. “I came to see a book with six or seven chapters that all said the same thing: It’s hard to tell,” he told The New York Times. In the absence of hard data, we continue to study the income gap—not work to halt or reverse its growth.

The story is nearly the same with financial education. We’ve been studying what needs to be done for two decades, and what started as a given—teach kids about money and they will learn and benefit—has devolved into global handwringing over a paucity of absolute evidence that financial education changes behavior. So we fail to act in a decisive manner, which continues to leave young people ill suited to make important decisions about college loans and so much more.

Despite the immense headwinds of slow economic growth, stagnating wages, limited upward mobility and massive underemployment, young people have a silver bullet: time. If they can stay relatively debt free, pay off their college loans and start saving now they will be just fine in 40 or 50 years. But they must learn to start now. This is not an issue that can be put on the shelf.

Why is there such a high burden of proof in order to embrace financial education? We don’t expect all English students to become authors. We don’t expect all math students to become engineers. We don’t expect all foreign language students to become fluent. Why must we first insist on proof financial education works on a large scale? After all, the goal is not to turn our children into little Wolves of Wall Street anymore than it is to turn them into best-selling engineers in five languages. Our goal is to give them a level of confidence so that they are willing to ask questions and get satisfactory answers before spending and choosing where and how to save.

We have to start somewhere. We can work out the kinks as we go. As professor Jencks told The Times on the income inequality question: “Can I prove that anything is terrible because of rising inequality? Not by the kind of standards I would require. But can they prove I shouldn’t worry? They can’t do that either…Something that looks bad is coming at you. Saying that we shouldn’t do anything about it until we know for sure would be a bad response.” He could easily have been talking about our nation’s failing financial I.Q.

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