Economic and Financial Education Forging Ahead · Economic and Financial Education in September 2003 at the Federal Reserve Bank of Atlanta. This docu-ment summarizes the ideas put

FORGINGAHEAD

FEDERAL RESERVE BANK OF ATLANTA and the GEORGIA COUNCIL ON ECONOMIC EDUCATION

ECONOMIC AND FINANCIAL EDUCATION

GASummit2 2/9/04 10:18 AM Page 2

ECONOMIC AND FINANCIAL EDUCATION

CONTENTS

Executive Summary 2FORGING AHEAD FOR ECONOMIC AND FINANCIAL EDUCATION“If you’re not forging ahead, you’re losing ground.”

The National View 4TOWARD A K-12 ECONOMICS CURRICULUMEconomic Education Needs Stronger AdvocacyA national leader puts Georgia’s accomplishments in perspective.

Curriculum 7CURRICULUM PAST AND PRESENTGeorgia Requires More Than Many StatesHow can we capture the synergy between economics and personal finance for the benefit of Georgia students?

Teacher Training 10PREPARING TEACHERSHow can we strengthen teacher training to improve classroom instruction?

Lifelong Learning 14KNOWING VERSUS DOINGDoes Adult Financial Education Work?

Financial Education 17THINKING OUTSIDE THE BOXLook for inspiration in other disciplines’ research on how to change consumer behavior.

Recommendations 18CLOSING THE GAPSWhere Do We Go From Here?

Speakers 21SPEAKER BIOGRAPHIES

FORGINGAHEAD


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In some Georgia schools today, manystudents are lucky enough to learnabout money in elementary school,about economic incentives in middleschool and about economic policy andpersonal finance in high school. Inother schools, those not so lucky todaycould be the employees of tomorrowwho don’t know how to invest and savefor retirement. They might be amongthe huge number of young peoplewhose easy access to credit cards leadsto overwhelming debt or bankruptcy.And they’ll probably have no idea howthe policies of their elected officialsaffect their own pocketbooks.

Economics is, in simplest terms,the science of decision making. Andour schools need to help tomorrow’sconsumers, workers, investors andcitizens learn to make good decisionsin the complex financial world theywill enter.

Georgia is ahead of many states in economic education. It is one of 14 states that require students to pass ahigh school course in economics tograduate, and the state’s Quality CoreCurriculum incorporates principles ofeconomics from kindergarten through12th grade. For more than 30 years,businesses, foundations and nonprofits

FORGING AHEAD

FOR ECONOMIC AND FINANCIAL EDUCATION

Rosanne MacCauley usescurrent events to illustratethe impact of economicson the lives her students at Coastal Georgia MiddleSchool in Savannah.

EXECUTIVE SUMMARY


have supported economic and personalfinance education with programs andfunding.

But in this age of rapid change, ifyou’re not forging ahead, you’re losingground. Outlining how to move for-ward to close Georgia’s gaps in eco-nomic and financial education was thepurpose of the Georgia Summit onEconomic and Financial Education in September 2003 at the FederalReserve Bank of Atlanta. This docu-ment summarizes the ideas put forthat that meeting. Our next task is to setin motion some steps, detailed at theend of this booklet, to achieve thesepriorities:

• We need a comprehensive economiceducation curriculum, with attentionto personal finance, begun in kinder-garten and capped by a strong highschool economics course.

• We need to test what we expect ourstudents to learn.

• We need to ensure teachers are pre-pared to teach economics.

• Those who educate adults about per-sonal finance need to work togetherand measure their results.

Bank of America’s Gene Godboldsaid at the summit, “It would be veryeasy for us to articulate a broad agendaand all feel good about it: broader eco-nomic and personal finance under-standing amongst everybody. The hardpart comes in that dirty word calledexecution.”

I look forward to working with all ofyou to be sure that Georgia’s studentsget the best education possible in eco-nomics and personal finance. �

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PAT BARRONFirst Vice President and Chief Operating Officer,Federal Reserve Bank of

Atlanta,Chairman,

Georgia Council on Economic Education

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TOWARD A K-12ECONOMICS

CURRICULUMECONOMIC EDUCATION

NEEDS STRONGERADVOCACY

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THE NATIONAL VIEW

Economic education expert William B. Walstad says it

takes a high school course, a cohesive curriculum

K-12, and strong advocates for economic education.

In Henry County, all third-gradestudents participate in Mini-Society®, where they create acommunity, design a currency,and create goods and servicesto sell at market day.


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We know how to deliver economic educa-tion, said Bill Walstad, but schools need a

clearly articulated economics curriculumfrom kindergarten through graduation.

Imagine if most high school graduatesnever took a math or science or lan-guage arts course, or at most took onlyone semester. Would American parentsor employers accept this? Clearly not.

Yet fewer than half of U.S. highschool students take even one coursein economics, according to William B.Walstad, a leading authority on eco-nomic education, in his keynoteaddress to the Georgia Summit on Eco-nomic Education.

“The alternative is to learn from lifeexperience, but life’s a pretty toughteacher,” he said, noting that mistakesin this arena can be painful. “Theschool of life for learning economics isoften the school of hard knocks, and itis an expensive form of education.”

Walstad’s work over 25 years hasearned him a place as the nation’sleading expert on K-12 economic edu-cation. Now director of the NationalCenter for Research in Economic Edu-cation and chair of the Committee onEconomic Education of the AmericanEconomic Association, he outlinedthree issues critical to improving eco-nomic, financial and business literacyin the United States:

1 Economics must be taught inhigh school — not just throughisolated concepts in other

courses but also through a separate,required course.

“You’ve done a good job of that inGeorgia: You’re ahead of the game witha required course,” Walstad said. “Thatcourse needs to be protected as basiceconomics because we can’t just take itand jam everything into it.”

2We must build a cohesive K-12economics curriculum fromisolated courses and scattered

objectives throughout the rest of the curriculum. Walstad envisions asequence of integrated courses thatwould develop economic, personalfinance and business literacy to meetthe challenges that confront students asthey go forth into the world. Economicconcepts would be the foundation, withtheir application illustrated throughconcrete examples in several subjects.

Currently, concepts related to eco-nomics may be dispersed throughoutthe K-12 curriculum, but they need tobe sequenced into a cohesive path. Forinstance, high school students mighttake scattered courses in personalfinance, entrepreneurship or career

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education. Students might learn abouteconomic motives in government andhistory classes. Even the youngest stu-dents have the chance to connectbasic economic concepts to what theyare learning, but the opportunitiesoften pass without making explicitconnections.

“Economic education is more thanjust a one-semester course in econom-ics,” Walstad said. “It is the applicationof economic concepts and principlesfor improving students’ understandingof personal finance, business, careersand public policy.”

Walstad recommended that states setup “gap” task forces to identify coursesthat could help build this coherent K-12curriculum in economics.

3 We must be stronger advocatesfor economic education. Weneed a more convincing case

and a better strategy to take it to the

public. The many organizations work-ing on behalf of economic and financialeducation — the National Council onEconomic Education, Junior Achieve-ment, Jump$tart and the FederalReserve Banks, for instance — shouldadvocate their own agenda but alsowork together toward a whole greaterthan the sum of its parts.

NOT REINVENTING THE WHEELWalstad reminded attendees that

substantial progress has been made inmany areas. We have good contentstandards for what students shouldlearn. We have good instructional mate-rials. Essential in-service training forteachers is provided by the NationalCouncil and the Georgia Council onEconomic Education.

So the critical issue is not how todeliver economics education. Thepieces will fall in behind a more coher-ent K-12 economics curriculum, Wal-stad said; more teachers will flow intoin-service training, states will requirestronger economics backgrounds oftheir certified teachers and testing willimprove. �

A good teacher can turn the Stock MarketGame™ into a tool to help students learnabout concepts such as financial markets,profit and loss, and personal finance.


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David Martin, the executive director ofthe Georgia Council on Economic Edu-cation, has been involved in economiceducation in the state since the early1970s. He related the history of Geor-gia’s curriculum and testing require-ments for economics and personalfinance.

In 1976, the state mandated threenew high school courses: economics/business/free enterprise, personalfinance and career education. But thepersonal finance and career educationcourses barely got off the ground.Career education was to be integratedinto every class, Martin recounted, andpersonal finance, not considered a rig-orous course, was squeezed out byother subjects in the curriculum. Per-sonal finance didn’t have a champion,he said, because the different depart-ments that taught it did not make it atop priority.

CURRICULUM

CURRICULUMPAST A N D PRESENTGEORGIA REQUIRES MORE THAN MANY STATESStudents need more exposure to basic economic

concepts as well as to personal finance skills. Eco-

nomics and personal finance complement one

another and should not compete for a place in the

curriculum. With limited time in the curriculum, how

can we capture the synergy between financial and

economic education?

Sallie Adams Daniel of TroutmanSanders (left) moderated a cur-riculum panel of David Martin ofGCEE, Hilary Hunt of Jump$tart,and Carol Penland of Campbell

High in Cobb County.

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In the 1980s, Georgia’s Quality CoreCurriculum integrated objectives ineconomics, personal finance andcareers throughout the curriculum andcapped it off with the required highschool course in economics. Today,Martin said, there are economics andpersonal finance objectives throughoutthe QCC, and personal finance exam-ples often illustrate economics in therequired high school economicscourse. Schools sometimes offer per-sonal finance as an elective or a localschool system requirement.

One complexity in the relationshipamong the different strands of eco-nomic education, he said, is thatteachers of different backgroundshave traditionally taught these differ-ent subjects. Vocational teachersteach career education. Social studiesteachers most often teach economics.And family and consumer science orbusiness education teachers teach per-sonal finance.

“What we’re trying to create is goodlifelong decision makers. That’s whateconomics teaches,” Martin said,emphasizing that economics and per-sonal finance are integrally related. “Inour democratic society, we make a lotof choices, but how smoothly societyoperates depends on us making good,rational decisions.”

GETTING MORE PERSONALStudents Need Personal Finance

Hillary Hunt of the Jump$tart Coali-tion urged that personal finance bepurposefully integrated into all levelsof the curriculum in economics, busi-ness, math and other subjects. Thefour content areas Jump$tart empha-sizes are income, money management,spending and credit, and saving andinvesting.

The Summit brought togetherbusiness leaders, educators,and non-profit leaders.

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“The high school course [in eco-nomics] is a good first step, but badhabits start early,” she said. “Personalfinance still has back-of-the-book, last-chapter status.”

Jump$tart’s 2002 survey of K–12financial literacy shows a deplorablerate of financial literacy, she said, withalmost half of high school seniors fail-ing a Jump$tart test. And as soon asthey from graduate high school, thechallenges begin. The average collegefreshman receives eight credit cardsolicitations the first week, and col-leges are hiring credit counselorsbecause the most frequent reason stu-dents leave campus is non-college-related debt, she said.

“We don’t just hand students thekeys and say go drive,” Hunt said, illus-trating the dangers of sending studentsinto the world unprepared for their per-sonal financial futures.

MAKING THE ABSTRACT PERSONALTeachers Use Finance Topics in Basic Economics

Carol Penland’s approach is to teacheconomics using personal finance toillustrate otherwise abstract economicconcepts.

Penland, a 28-year veteran of CobbCounty high schools, says she placeseconomic concepts on a personal levelthat her students can grasp. “What doyou care about GDP if you don’t seethe relationship to you?” she asked.

A longtime advocate of economicand personal finance education, Pen-land says that as a teacher, “where therubber hits the road,” she sees up closethe importance of students under-standing the basic concepts and thespecific skills.

“Many students getting out of highschool are not prepared for whatthey’re going to face. They have noidea about budgeting and learning tolive within your means and using cred-it wisely,” she said. “It doesn’t matterhow well you can read or write if youhave to face that bankruptcy judge.And if we can do something to helpstudents avoid that, then I think we’vedone our job.”

“I would like to have back my ownpersonal finance course, but I under-stand that our resources are limited. Sowe teach economic theory, but we’retrying to use personal finance applica-tions as often as we can,” she said. �

What we’re trying to create is good lifelong

decision makers. That’s what economics teaches.

David Martin

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The three Georgia agencies that gov-ern what teachers learn and what theyteach came together to discuss thisissue: the state Board of Education,which establishes the curriculum localschools hire teachers to teach; the uni-versity system, which prepares theteachers; and the Professional Stan-dards Commission, which specifiesand certifies what teachers must knowto teach.

“A teacher can teach economicswithout having any background ineconomics,” said University System ofGeorgia Regent Elridge McMillan,president emeritus of the SouthernEducation Foundation, in introducingthis panel. “This has an impact on stu-dent performance which must beaddressed.”

PREPARING TEACHERS

In their college work, teachers are not generally pre-

pared to teach economics or personal finance. How

can we strengthen teacher training to improve class-

room instruction?

TEACHER TRAINING

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SETTING THE BARAgencies Must Work Together to Strengthen Standards

Julie A. Weisberg, senior educationprogram specialist with the GeorgiaProfessional Standards Commission,explained the role of the PSC in college-level preparation of teachers.

“We know that the best teachers arethe teachers who know their subjectsand are well prepared with good teach-ing skills,” she said.

What teachers are required to learn isbased on a set of standards in turnbased on national teacher accreditationstandards and on standards of nationalcontent-area organizations. In econom-ics, these organizations are the NationalCouncil for the Social Studies and theNational Council on Economic Educa-tion, whose standards “pretty muchmatch,” Weisberg said. “What NCEEsays students should know, NCSS saysteachers should be able to teach.”

The PSC balances these standardswith competing interests such as thehiring market. For example, No ChildLeft Behind legislation requires thatteachers — including social studiesand economics teachers — be “highlyqualified” by 2006.

“How do we define ‘highly qualified?’ ”Weisberg asked. “If we do that by say-ing they have to have a major in eco-nomics, schools won’t be able to findhighly qualified teachers. But if we sayjust a broad-field social studies certifi-cate, we deal with the supply issue butnot with content.

“All of those things come together toproduce the standards PSC adopts,”she said. “It’s a complicated process,with many interests at play.

“We need the guidance of the profes-sional community in developing thestandards to evaluate teachers,” shesaid. “Right now they are more theoret-ical than practical. We need guidancefor economics teachers and a broad-field social studies teacher. We need towork very closely together to formulatechanges to those standards.”

GETTING GROUNDEDTeachers Need Fundamental Economics

Kathy Cox, Georgia Superinten-dent of Schools, put forth severalideas for how economics teachersmight gain the fundamental knowl-edge of economics she found soimportant when she was a socialstudies teacher teaching economics.

LEFT: Julie Weisberg of the Georgia Professional Standards Commission (left)discussed teacher preparation standardswith Elridge McMillan of the Southern Edu-cation Foundation, State Superintendentof Schools Kathy Cox and University System Chancellor Thomas Meredith.

Most teachers assignedto economics have littleor no background in thesubject and must gain it

through workshops orcollege-level courses.


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We know that the best teachers are the

teachers who know their subjects and are well

prepared with good teaching skills.Julie A. Weisberg

“”

While the Georgia Council on Eco-nomic Education does a great jobtraining teachers on specific econom-ics teaching programs, they still needthe basic theory only college-levelcourses can afford them, she said.

“We need to offer college-levelcourses to economics teachers, andwe need to do it free of charge,” shesaid. “HOPE [scholarships] can beused by teachers in critical fields to goback and get content, but those criti-cal fields never include social studies.Our finest teachers have to use theirown money to advance their knowl-edge in their fields if it’s not identifiedas a critical field.”

WORKING TOGETHERUniversities Work to Prepare Quality Teachers

University System of Georgia Chan-cellor Thomas C. Meredith, also a for-mer social studies teacher, emphasizedthe importance of partnership betweenthe university system and the stateboard of education in preparing teach-ers for the classroom.

Meredith referred attendees to theUniversity System’s “Regents’ Prin-ciples for the Preparation of SchoolEducators,” which include

• Quality Assurance — The UniversitySystem will guarantee the quality ofany teacher it prepares.

• Collaboration — Teacher prepara-tion programs will collaborate withschools to increase student achieve-ment, mentor new teachers, collabo-rate on teacher development andincrease school-based research onteacher preparation.

• Responsiveness — The UniversitySystem will encourage new andinnovative teacher preparation pro-grams and will also work with theDepartment of Education and theProfessional Standards Commissionto bring an end to out-of-field teach-ing in Georgia. �

RIGHT: Georgia’s universities andstate Board of Education must

work together to prepare the bestteachers for the classroom, said

University System of GeorgiaChancellor Thomas Meredith.


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RIGHT: Suzanne Boas (left) of the ConsumerCredit Counseling Service, Jeanne Hogarth ofthe Federal Reserve Board, Eugene Godboldof Bank of America, and Angela Lyons of the

University of Illinois at Urbana-Champaignmade the case for measuring the success

of adult financial education programs.

A growing number of organizations concerned about

adult financial literacy are offering financial educa-

tion programs for adults. How can we be sure that

economic and financial knowledge translates into

wise life choices? How can we measure success and

determine what leads to changes in behavior and

what doesn’t?

LIFELONG LEARNING

KNOWING VERSUS DOINGDOES ADULT FINANCIAL

EDUCATION WORK?

Jeanne Hogarth of the Federal ReserveBoard shifted the focus to lifelong per-sonal finance education for adults.Does this kind of education work, sheasked, and how do we know?

Many financial education programsshow positive behavior changes. Hogarth cited credit counseling thatimproved credit scores, homeowner-ship counseling that lowered delin-quency rates, employee educationprograms that increased 401K participation and other programs that increased savings rates anddecreased debts.

One of the challenges in document-ing what works in adult personalfinance education is that participantsare not randomly assigned but areself-selected individuals who want to change their behavior. Another,Hogarth said, is following people’sbehavior and success over timebecause tracking participants whomove or change jobs becomes moredifficult over time.

Hogarth reported on the connection —and disconnections — between knowl-edge and behavior in one study. Whatdo people know as opposed to whatthey do? For instance, 94 percent of


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people in the survey knew they shouldhave an emergency fund, but only 63 per-cent had one. Eighty-one percent knewthe kind of information included on acredit report, but only 58 percentreviewed their own. And while 92 per-cent knew that the earlier they startsaving for retirement, the more moneythey will have, only 63 percent had anyretirement account.

We know that financial educationprograms are making a difference, Hog-arth said, when people change theirbehaviors, credit scores and savingsrates go up, bankruptcies go down andparticipants feel confident and pre-pared for the major financial events intheir lives.

WHAT WORKS?CCCS Bases Programs on Research

Suzanne Boas of the ConsumerCredit Counseling Service of GreaterAtlanta said her organization finds inits clients a real disconnect betweenknowing and doing. They generallyknow what they should be doing —but don’t.

When resources are limited, researchis important to be sure you’re having animpact, Boas said.

One study followed CCCS clients dur-ing three years and found that the oneswith the most severe problems had the most improvements and that coun-seled clients in general had significant

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improvements. Another showed thatface-to-face counseling for first-timehome buyers reduced 90-day delin-quency rates by 34 percent and class-room counseling reduced delinquencyrates by 26 percent.

“We feel that studies like this, whileexpensive to undertake, are reallyimportant in grounding the kind ofwork we do and the way we deliverservice,” she said.

OVERCOMING CHALLENGESProviders Need Tools, Funding

Angela Lyons of the University of Illi-nois at Urbana-Champaign discussed

common challenges to implementinggood evaluation of adult personalfinance education programs:

• Limited resources make it difficult tofollow people over time to measurebehavior changes because such eval-uations take time and money.

• Nonprofits that develop educationprograms must take care to balancetheir own objectives with those ofthe organizations that fund theirprograms.

• The people who lead financial edu-cation programs don’t necessarilyhave the expertise to measure thesuccess of their programs.

• Personal finance educators needevaluation tools that show what theyshould evaluate and what they cando with the numbers, and they needmore ways to interact and share bestpractices.

With colleagues at the University ofGeorgia, Lyons is developing an evalua-tion tool kit for financial educators thatwill help them overcome some of thesechallenges. �

When resources are limited, research is important

to be sure you’re having an impact.

There’s often a discon-nect between whatconsumers know theyought to do and whatthey actually do.


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In his luncheon address to the GeorgiaSummit on Economic and FinancialEducation, Federal Reserve Board Gov-ernor Edward M. Gramlich encouragedfinancial education providers to findways to measure the effectiveness oftheir programs.

At a time when financial education isreceiving “an unprecedented amount ofattention and funding from businessesand a wide range of organizations,”Gramlich said we must remember that

financial education aims not only toincrease consumer awareness but alsoto change actual behaviors. He encour-aged attendees to learn from other disci-plines’ research on changing consumerbehavior, citing studies of health care,nutrition education, crime preventionand adult literacy campaigns.

“You have to follow people overtime and check their financial status,”he said. �

EDWARD M. GRAMLICHFederal Reserve Board Governor

FINANCIAL EDUCATION

THINKING OUTSIDETHE BOX

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Protect the high school economics course.It’s the best thing Georgia has going foreconomic and financial education, andwe need to be sure to solidify its placein the curriculum. Already stretched toimpart key economic concepts in onesemester, the course must retain itsfocus on economics and not become arepository for learning objectives fromother areas.

Examine the issue of when the highschool economics course should be taught.Some teachers teach it in the ninthgrade and others in 12th. Both posi-tions present challenges for testing orgraduation requirements. For instance,seniors are better equipped to compre-hend important economic conceptsand see the relationship to their ownmaturing lives, yet they risk not gradu-ating if they wait until spring semesterto take the required course and don’tpass it.

Establish a “gap” task force. This forceshould identify courses that could helpbuild a comprehensive curriculum thatunifies economic, personal finance,business and career learning fromkindergarten through graduation. Wehave assurances that economics isembedded in the revised QCC and thatpersonal finance was given good con-

CLOSING THE GAPS

WHERE DO WE GO FROM HERE?

RECOMMENDATIONS


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sideration. A task force should examinethis updated curriculum for opportuni-ties to form a cohesive K–12 economicscurriculum.

Support efforts to teach personal finance.Encourage personal finance examplesas best applications to illustrate eco-nomics in the required course. Throughlegislation, teacher bonuses and schoolrecognition programs, introduce incen-tives that reward teachers and localschools. Research is needed to find outhow many students are taking a stand-alone course and whether there are anylocal requirements for personal finan-cial education.

Encourage fair and rigorous testing ofthe required curriculum at the appropriatelevels. Economics is tested systemati-cally on national tests in the elementarygrades, where there is currently notmuch instruction in the subject. But theGeorgia High School Graduation Examdoes not include economics although it is a required course. A new end-of-

course test for the required economicscourse takes effect this school year.

Strengthen the requirements for teachersto teach economics and personal finance.Bring together the Professional Stan-dards Commission, the state Board ofEducation, the Board of Regents, theGeorgia Council on Economic Educa-tion and other key stakeholders to dis-cuss this complex issue.

Measure the success of the many pro-grams that exist by clearly defining goals atthe outset. Shift the focus in adult per-sonal financial education from creatingnew curricula. Identify corporate fund-ing resources that would enableresearch organizations to conduct astudy of the effectiveness of currentpersonal financial education programs.

Continue to work together to share bestpractices in adult personal financial educa-tion. Help programs find ways to con-duct better research on long-termbehavior change. �

Campbell High eco-nomics teacher Brett

Hardin represents the best of Georgia

economics teachers:he is a National Board

Certified teacher whoteaches International

Baccalaureate andAdvanced PlacementEconomics with skill

and passion.


For more on the Georgia Summit, visit www.frbatlanta.org.Under news & events, select conferences and click 2003.


Documents

Economic and Financial Education Forging Ahead · Economic and Financial Education in September 2003 at the Federal Reserve Bank of Atlanta. This docu-ment summarizes the ideas put