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“To fully participate in society today, financial literacy is critical.”

-Annamaria Lusardi, Denit Trust Professor of Economics and Accountancy at the George Washington School of Business, and Academic Director of the GW Global Financial Literacy Excellence Center

Making the Case for the Need for Economic and Financial Literacy Education in the Classroom

Despite the recognition that economic and financial literacy is critical to succeed in modern society, study after study shows that many Americans continue to lack even a basic understanding of economic and financial concepts, and the consequences on Americans’ financial state are dire. Yet there is hope for improvement in the future if we work to make economic and financial education a priority in our schools.At last count, only 20 states require students to take a high school economics course to graduate, and only 17 require a course in financial literacy (Council for Economic Education’s Survey of the States). However, years of substantive and carefully-designed research show that 1) K-12 students can learn economic and financial concepts when taught by teachers who know economics and know how to teach it and 2) students exposed to economic and financial education are more likely to display positive financial behaviors. For example,

  • Students exposed to mandated personal finance education exhibit meaningful improvements in credit outcomes. Three years following the implementation of mandates in Georgia, Idaho, and Texas, severe delinquency rates for those students receiving the education declined by 2% in Georgia, 2% in Idaho, and 6% in Texas, and credit scores increased by 2%, 3%, and 5% respectively.
  • State financial curriculum mandates elevate the rates at which individuals save and accumulate wealth during their adult lives. Net-worth-to-earnings ratios of those exposed to mandates are more than 9 percentage points higher than the ratios of those who were not exposed.
  • Students who have taken a class in personal finance are more likely to engage in financially responsible behaviors such as saving, budgeting, and investing: 93% of those who have taken a class save money vs. 84% of those who have not; 60% of those who have taken a class have a budget vs. 46% of those who have not; 32% of those who have taken a class have invested money vs. 17 % of those who have not.

Click here for a summary of recent research that supports these findings, outlines the ongoing knowledge gap in economics and personal finance, and discusses the implications for public policy initiatives geared toward improving economic and financial literacy education in the classroom.