Financial Education

It’s All About Implementation: Promising Results for State Financial Education Mandates

J. Michael CollinsBy J. Michael Collins, Ph.D., Center for Financial Security, University of Wisconsin-Madison

The growing complexity of financial decisions facing American consumers has prompted an increased emphasis by policymakers on promoting financial education at all stages of life. One group of specific concern is young adults, as they have been shown to have particularly low levels of financial literacy (Lusardi et al., 2010 http://www.nber.org/papers/w15352.pdf ).

The 2008 financial crisis further demonstrated the need for broad-based financial education. However, the existing body of research on the effectiveness of financial literacy education has yielded limited evidence that it improves financial outcomes and behaviors according to research (Fernandes et al., 2014 http://pubsonline.informs.org/doi/pdf/10.1287/mnsc.2013.1849 and Willis, 2011 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1869323).

Policymakers have promoted financial education in schools as a means of combating negative financial behaviors and low levels of financial knowledge. However, research on the effectiveness of financial education has found, at best, mixed evidence in terms of education resulting in changes in financial behaviors. Even in the absence of evidence on the effectiveness of financial education, policymakers at the state level have expanded and strengthened personal finance and economic education requirements for K–12 students, a topic which has been taught in K–12 public schools in the U.S. since the 1950s. Determining which particular financial education programs yield the greatest benefits would allow states to design an effective curriculum.

Yet, we have natural “experiments” in states all the time, where school systems implement new mandates for courses that must be taught–and tested–before a student can graduate. At least 2 states, Georgia and Texas, did so in 2007. Thanks to data from the Federal reserve, my CFS [http://www.cfs.wisc.edu/] colleagues Carly Urban [http://www.montana.edu/urban/ ] and Max Schmeiser [http://www.federalreserve.gov/econresdata/maximilian-schmeiser.htm ] were able to obtain a sample of credit records for people in these states and nearby states (New Mexico and Florida–both states with no change in financial education mandates for high school graduation).

We then compared the changes in credit scores and loan delinquencies in states after implementation of the mandate to the changes in comparable states that did not pass mandates. Both GA and TX implemented well-documented requirements and testing, so we are confident students who graduated after 2007 were exposed, at least on average, to more financial education. Overall, we find that if a rigorous financial education program is carefully implemented in schools, it can improve the credit scores and lower the probability of delinquency for young adults. In Georgia, graduates after the new education mandates have credit scores 11 points higher and 30 day delinquencies are lower by 4.2 percent. In Texas, graduates after the mandate have credit scores over 31.7 points higher and lower 90-day delinquency rates by 6 percent, a relative decrease in delinquency rate of 33 percent (view full report: http://www.finra.org/sites/default/files/investoreducationfoundation.pdf ).

All young people have lower credit scores—they are learning by experience. And, according to our data, nearly a quarter of young people are 30 or more days behind on at least one account. Yet, payments have big effects on the credit score of someone with a brief credit history and therefore, avoiding missed payments can have real long run effects.

More work needs to be done to understand what forms of education best benefit young people, if starting earlier has larger effects, and if less intense requirements might result in similarly sized benefits. We still do not know how well these effects will persist into later adulthood—but formal education may jump start trial and error learning that young adults often experience in credit markets.

POSTED: April 15, 2015 | BY: Daniel Thompson | TAGS: , , , ,

Teaching Opportunity – January 2015

Download Teaching Opportunity - January 2015

In This Issue:

  • 2015 Call for Annual Conference Proposals
  • 2 New Math in the Real World Lessons Now Available
  • AP Micro and AP Macro Economics Bundle: Special Discount
  • Your Teaching Has An Impact!
  • 3 Demonstration Videos for HS Economics
  • This Day in Economic History

Read more…

POSTED: January 26, 2015 | BY: John Jones | TAGS: , , , , , , , , , , , , , , ,

CEE Offers Free Online Assessment Center

Online Assessment Center

The Council for Economic Education is now offering the Online Assessment Center. The OAC is a free online resource that provides teachers with an easy and efficient way of measuring their students’ academic progress. It allows teachers to track real-time data on their students’ understanding of economic and financial concepts.
Read more…

POSTED: December 1, 2014 | BY: Daniel Thompson | TAGS: , , , , , , , , , , , , , , , , , , , , ,

Students Celebrate CEE’s 65th Birthday

In celebrating the Council for Economic Education’s 65th Birthday, we asked students to share their thoughts on the age of 65. CEE asked a group of K-12 students to finish the thought, “When I’m 65…” Watch them share their ideas and goals below!

Kids Celebrate CEE's 65th Birthday!

Students like these have benefited from CEE since its creation in 1948. Since then, it has provided economic education and financial literacy to elementary, middle, and high school students throughout the nation. To do this, over the past 65 years CEE has focused on “educating the educators” and equipping them with the necessary resources so that students like those in the video have the ability to realize their dreams over the next 65 years.

POSTED: November 25, 2014 | BY: Daniel Thompson | TAGS: , , , , , , , , , , , ,

Kids on Economics

What do kids think about economics? Watch this video to see elementary, middle and high school students talk about the importance of understanding economics and personal finance principles. You’ll be surprised to see how insightful these kids are when they talk about viewing the world through economic lenses!

Watch Kid’s on Economics!

POSTED: November 18, 2014 | BY: Daniel Thompson | TAGS: , , , , , , , , , , , ,

Alfred P. Sloan Award Winners

The Alfred P. Sloan 2014 Teaching Champion Awardees were recognized at the CEE Visionary Awards for excellence and using innovative teaching methods in their classrooms.

Darren Gurney

Darren Gurney
12th Grade Economics Teacher
New Rochelle High school, New Rochelle, NY

Learn More About Darren Gurney

Kathleen O’Hagan
4th Grade Teacher
P.S. 97/ The Highlawn School, Brooklyn, NY

Learn More about Kathleen O’Hagan

Amanda Tombari

Amanda Tombari
12th Grade Teacher
Clarkstown South High School, West Nyack, NY

Learn More about Amanda Tombari

The Alfred P. Sloan Teaching Champion Award aims to promote economic and financial education at the K‐12 level by recognizing teachers who effectively deliver this important content in their classrooms and achieve results.

POSTED: November 14, 2014 | BY: Daniel Thompson | TAGS: , , , , , , , , ,

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