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  • WORKINGPAPERNO.201301

    EvidenceofStudentAchievementina

    HighSchoolPersonalFinanceCourse

    By

    AndrewT.Hill,BonnieT.MeszarosandBrianTyson

    WORKING PAPER SERIES

  • TheviewsexpressedintheWorkingPaperSeriesarethoseoftheauthor(s)anddonotnecessarilyreflectthoseoftheDepartmentofEconomicsoroftheUniversityofDelaware.WorkingPapershavenotundergoneanyformalreviewandapprovalandarecirculatedfordiscussionpurposesonlyandshouldnotbequotedwithoutpermission.Yourcommentsandsuggestionsarewelcomeandshouldbedirectedtothecorrespondingauthor.Copyrightbelongstotheauthor(s).

  • EvidenceofStudentAchievementinaHighSchoolPersonalFinanceCourse

    AndrewT.Hill*EconomicEducationAdvisor

    FederalReserveBankofPhiladelphiaTenIndependenceMallPhiladelphia,PA19106

    Telephone:(215)5744392Fax:(215)5742512

    Email:andrew.hill@phil.frb.org

    BonnieT.MeszarosAssociateDirector

    CenterforEconomicEducationandEntrepreneurshipUniversityofDelaware102AlfredLernerHallNewark,DE19716

    Telephone:(302)8311896Fax:(302)8316659

    Email:meszaros@udel.edu

    BrianTysonGraduateStudent

    UniversityofTexasatAustinAustin,Texas78712

    December7,2012

    * TheviewsexpressedinthispaperarethoseoftheauthorsanddonotnecessarilyrepresentthoseoftheFederalReserveBankofPhiladelphiaortheFederalReserveSystem.TheauthorsthankSusheelaPatwariforvaluableresearchassistanceintheearlystagesofthisproject. Correspondingauthor.Atthetimethisresearchwasconducted,BrianTysonwasaresearchanalystattheFederalReserveBankofPhiladelphia.

  • 2

    EvidenceofStudentAchievementinaHighSchoolPersonalFinanceCourse

    Abstract

    ThisstudyinvestigatestheeffectoftheKeystoFinancialSuccesshighschoolpersonalfinance

    curriculumonstudentachievement.Itreliesonmultipleyearsofpreandposttestdatafrom1,701

    studentswhotookaKeyscourseandfromacomparisongroupof261studentsfromthesame

    schools.TheresultsfromthepreandposttestsshowthatstudentswhotaketheKeyscourseexhibita

    statisticallysignificantincreaseintheirpersonalfinanceachievement.Theseresultscontributetothe

    growingliteratureshowingthepositiveeffectsonthefinancialknowledgeofhighschoolstudentswhen

    theytakeawelldesignedcoursetaughtbyproperlytrainedteachers.

    Keywords:personalfinanceeducation,precollege,economiceducation,curriculum,assessment

    JELcodes:A2,A21,D14

  • 3

    INTRODUCTION

    Overthepastdecade,therehasbeenincreasedattentionontheneedtoincludepersonal

    financeinthehighschoolcurriculum.Thisperceivedneedhasbeenfueledbyarticlesfromthepopular

    press,statisticsontheimpactofpoorfinancialdecisionsmadebyyoungadults,andarticlesfromthe

    academiccommunity.Inaddition,thecallforfinancialeducationhasbeenreinforcedbyformerFederal

    ReserveChairmanAlanGreenspan(2001)andcurrentChairmanBenBernanke(2006).Whiletherehas

    beenagrowinginterestinofferingpersonalfinanceeducationintheK12classroom,thereislimited

    evidencethatpersonalfinanceinstructionincreasesstudentpersonalfinanceachievement.Thispaper

    explainsthefeaturesofahighschoolpersonalfinancecurriculumKeystoFinancialSuccess,whichis

    offeredbyaconsortiumofpartnersinDelaware,NewJersey,andPennsylvaniaandtheresultsfroma

    multiyearstudyofpreandposttestscoresfromstudentsinclassroomswithteacherswhousethe

    Keysmaterials.

    LITERATURE

    Today,morethananyothertime,individualsareexpectedtotakemoreresponsibilityfor

    handlingtheirpersonalfinancesandplanningfortheirretirement.Atthesametime,thefinancial

    servicesavailabletothemhavebecomemorecomplexandspecialized.Todaysconsumersfaceanarray

    ofsophisticatedproducts.Highlevelsofconsumerdebt,predatorylending,lowsavingsrates,an

    increaseinnonbusinessbankruptcyfilings,andexpandedaccesstocreditforyoungerpopulationsarea

    fewofthefactorscontributingtotheincreasedattentiontotheneedforpersonalfinanceeducation

    (BraunsteinandWelch,2002).Withtherecentfinancialcrisis,thefocusonafinanciallyliteratecitizenry

    hasmovedtocenterstage.Partoftheresponsibilitytoensurethatthisgoalisreachedrestswith

    AmericasK12schools.Studentsleavinghighschoolshouldbegroundedinthefundamentalsof

    personalfinancetobepreparedfortheirrolesasconsumers,savers,andinvestors.

  • 4

    Oneoftheimpactsofthepushforfinancialeducationintheschoolshasbeenanincreasein

    statesmandates.In2009,44statesincludedpersonalfinancetosomeextentintheirstateeducational

    standardsand34statesrequiredthatthesestandardsbeimplemented.Thirteenstatesnowrequire

    studentstotakeapersonalfinancecourseorincludepersonalfinanceinaneconomicscourseasahigh

    schoolrequirementforgraduation(CEE,2009).Havingmandatesdoesnotnecessarilytranslateinto

    studentachievement.TennysonandNguyen(2001)foundthatinstatesthathavebroadlydefined

    personalfinancemandates,studentsdidnotscorehigheronapersonalfinancetest.However,thosein

    statesthatrequiredaspecificfinancialeducationcoursescoredsignificantlyhigherthanstudentsin

    stateswithoutmandates.

    TheJump$tartCoalitionofPersonalFinancialLiteracybeganconductingbiannualnational

    testingofhighschoolstudentsin1997.Mandell(2008)reportsthatresultsfromthe2008Jump$tart

    surveywerediscouraging.Thesurveyfoundthatthefinancialliteracyofhighschoolseniorswasatits

    lowestlevelsincethefirstJump$tartsurveywasadministered.The2008averagescorewas48.3

    percent,downfromahighof57.3percentin1997.Infact,studentswhotookasemesterlonghigh

    schoolpersonalfinancecoursedidnotdobetterontheJump$tartexaminationthanthosewhodidnot

    takeapersonalfinancecourse.ThesefindingswerecitedbyWillis(2008)asareasonagainstfinancial

    literacyeducation.Shearguesthatthemoveformorepersonalfinanceeducationintheschoolsshould

    beabandonedandsuggestssearchingforpoliciesthatcouldleadmoredirectlytogoodconsumer

    financialoutcomes.MandellandKlein(2009)drewsimilarconclusionsandstatedthatuntilmore

    evidencewasavailablethatdemonstratedthatpersonalfinancecoursesatthehighschoollevel

    influencedsubsequentfinancialbehavior,theallocationofresourcestowardmandatoryclassesshould

    bereconsidered.

    MandellandKlein(2007)suggestthatstudentsretainlittleofwhattheylearninpersonal

    financebecausetheydontperceivethatitisrelevanttotheirlives.Motivationisacriticalfactorin

  • 5

    studentsbecomingfinanciallyliterate.Theauthorsconcludethatsuccessfulprogramsmustinclude

    instructiononsettingclearandobtainablegoalsandhelpingstudentsseehowbasicfinancialliteracy

    willallowthemtoreachtheirgoalsandaddvaluetotheirlives.Inaddition,MandellandKlein(2007)

    concludethatthepoorresultsontheJump$tartsurveyspointouttheneedforteachertrainingand

    betterinstructionalmaterials.However,thesesurveysdoshowthathighschoolstudentswhoplaya

    stockmarketgamearemorefinanciallyliteratethanstudentswhodonot(Mandell,2006).A2009

    studytoassesstheimpactoftheStockMarketGamefoundthatstudentswhoplayedthegamescored

    significantlyhigheronfinancialliteracyteststhantheirpeerswhodidnotplay(Hinojosaetal.,2008).

    MandellandKlein(2007)suggestthatthisimpliesthatpersonalfinanceclassesthataretaught

    interactivelyandareperceivedbythestudentstoberelevanttotheirlivesmaybemoreeffectivethan

    classesthatusemoretraditionalmethodsofinstruction.

    Asthedemandforpersonalfinanceeducationhasincreasedsohastheavailabilityof

    instructionalmaterials.Therehasbeenaproliferationofnonprofitorganizations,financialinstitutions,

    congressionalbills,andevenafederalcommissionpromotingfinancialliteracyinrecentyears.Manyof

    thesegroupsprovidefreeorinexpensiveinstructionalmaterialsforchildrenandadults.However,

    limitedresearchhasbeendoneontheeffectivenessofthesematerials.

    HathawayandKhatiwada(2008)foundthatmostresearchhasnotproventheeffectivenessof

    financialeducationprograms.Theyconcludethattherearetwolikelyreasonsforthis.First,the

    programsarenoteffectiveintransferringknowledgebecauseofeithertheirdesignorhowtheyare

    administered.Second,theprogramsarenotbeingevaluatedproperly.Althoughtheauthorsreviewed

    researchmainlyonadultprograms,theirfindingshaveimplicationsforpersonalfinanceeducation.

    HathawayandKhatiwada(2008)concludethatastandardbutadaptableframeworkforevaluationofall

    typesofliteracyprogramsisneeded.ThisissupportedbyFox,Bartholomae,andLee(2005)who

    recommendedJacobss(1988)fivetieredapproachtoevaluationwithapplicationsforpersonalfinance.

  • 6

    Walstad,Rebeck,andMacDonald(2010)alsostressedtheuseofJacobssmodelwhenevaluatingthe

    videobasedcurriculumFinancingYourFuture.Theyoutlinedthefivestagesforpersonalfinance

    programevaluation.First,setacleardefinitionofcontent.Second,trainteachersincontentanduseof

    programmaterials.Third,specifyknowledgeoutcomesthataremeasuredwithreliableandvalid

    instruments.Fourth,collectdataonpreandposttests.Fifth,rigorouslyanalyzedatausingappropriate

    formsofstatisticalanalysis.

    Thereareanumberofstudiesthathaveshownachangeinstudentachievementinpersonal

    financeafterexposuretoaspecificcurriculum.InasurveyofstudentswhocompletedtheHighSchool

    FinancialPlanningProgram,Todd(2002)foundthat,followingthetraining,50percentofthestudents

    reportedincreasesinfinancialknowledge.Thissupportsfindingsfromanearliersurvey(Boyceand

    Danes19971998)thatfoundthatstudentsfeelmorefinanciallyliterateafterthecompletionofthe

    personalfinancecourse.Varcoeetal.(2005)useda10itempreandposttrue/falsetesttodetermine

    theimpactoftheMoneyTalks:ShouldIBeListening?curriculumonstudentachievement.Theresults

    fromthetrue/falsetestsandtheselfreporteddataindicatedthatstudentswhoparticipatedinMoney

    Talksseemedtoimprovetheirfinancialknowledge.However,thesestudiesfailedtoincludeoneor

    moreofthestepsrecommendedinJacobss(1988)fivetierapproachto

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