By Elena Torres-Pepito
It’s funny how we learn so much math in school but then so little of what we can do with it. It’s a common joke that high schools will cover the pythagorean theorem before they even touch on taxes. The standard K-12 curriculum has consistently placed a focus on a limited scope of subjects, condensing the scope of human knowledge down into English, math, science, history, and sometimes social studies. However, as we move into 2021, emerging from social movements which have prompted a reevaluation of our cultural values and institutional arrangements and sitting at a pivotal point in history where life as we knew has been irrevocably disrupted, it’s worthwhile to reconsider what it is that we teach. Currently, economics and personal finance courses are only listed as graduation requirements in half of the states in the country. Placing a greater focus on these areas would both serve to make students more educated decision-makers and increase equity in the distribution of financial knowledge, lending more credence to our national emphasis on personal responsibility.
A 2005 Harris Interactive survey found that almost half of Americans did not understand the impacts of interest rates on their personal savings, could not state the role of the stock market in the economy, or correctly define “budget deficit.” Discussions of economic stimulus bills and a mounting budget deficit illuminate the necessity for citizens, the voters and participants in democratic society, to have a basic understanding of the forces that govern what they consume and how money moves.
However, the reality lies far from this, and this lack of understanding of basic economic principles can affect what people believe about policy. A survey administered by William Walstad, the director of the National Center for Research in Economic Education, found that only 5 in 10 students could identify the forces of supply and demand as that which sets prices in a competitive market. Notably, those with an understanding of market forces were more likely to deem it fair for a company to raise the price of a product because of an increase in demand absent an increase in cost of production. A basic understanding of economic principles affects what we consider appropriate within the national economy and can allow us to make more informed value judgements.
Contemporary economic conversations have centered around equity in personal finance. Americans currently own $1.7 trillion dollars in student loans, an amount so significant that many politicians have called for debt cancellation. This “crisis” underscores the serious lack of education around debt, budgeting, and return on investment. In a 2020 survey, the National Financial Educators Council found that Americans estimated they had lost over $1,600 a year due to poor money management. Additionally, a 2019 study by Dr. Melody Harvey found that taking personal finance classes in high school significantly cut down the probability that a young adult would take out a payday loan. Additional research has shown that students who take personal finance courses are more likely to apply for college financial aid, carry a lower credit balance, and take out subsidized loans (rather than private loans). Even a basic education in economics and personal finance has the potential to affect the choices students make in their own lives for the better and equip them with the ability to make decisions that benefit them over time.
Despite the clear benefits to financial and economic education, it is still far from widespread. Every two years, the Council for Economic Education administers the “Survey of the States,” where they tally high school graduation requirements in economics and personal finance. In 2020, 21 states required students to take a personal finance course while 25 had a similar standard for economics. These numbers have been increasing, yet they are still indicative of a country that understands economic and financial education as something to be placed to the side.
This is concerning, not just because it means we are asking people to be active participants in governance without a basic understanding of the functions of fiscal policy and finance, but because without a widespread means of distributing this knowledge, an understanding of wise personal finance decisions tends to be maintained among those who are already well-off. The Council for Economic Education found that students in school districts with less than 25% of students receiving free and reduced-price lunch were almost three times more likely to be required to take a personal finance course than those who were in school districts with 75% lower-income students. As it stands, those who are most likely to learn how to manage taxes, invest in retirement funds, and keep a strong credit score are those who already come from backgrounds with financial support. They learn how to make financial systems work for them while others may make mistakes that take years or decades to correct. Wise financial decisions are often framed as a matter of personal responsibility, but it’s worth considering the ease with which those from different backgrounds have access to this knowledge and the varying degrees of emphasis it may be placed under as families’ financial and social backgrounds vary. This education is not just of individual concern; it is a matter of social justice.
The coming decades will present innumerable challenges to our country and livelihoods. We will all have to make decisions, voting on our vision for our country and planning out our own futures. 2020 invited us to reconsider the status quo, and as we proceed forward, we need to push legislatures and school districts to offer and enforce requirements centered around economics and personal finance. This won’t fix every crisis or undo all inequality, but it is a vital step towards creating a world where we are all able to direct our future with an understanding of the consequences.