The Manifesto of the Financial Educator

As a financial researcher and aspiring financial educator, I’ve been thinking at length about the principles behind good financial teaching. These five ideas are by no means new or original. However, they are research-supported and not yet mainstream.

1. Behavior Under Management

Know when the student is not ready.

This is straight from Andy Hart’s podcast and conference, with support from a wealth of research in behavioral psychology, economics, and personal finance. Emotion, perception, knowledge, and experience all play an important role in why people make bad financial decisions.

It is widely accepted that younger people should be fully invested in stocks, because their time horizon is long. As they get older, volatility and profits should both be suppressed by divesting stocks into safer, less profitable assets such as bonds. However, young people commonly freak out when there is a bear market, selling their investments and even losing part of their principal. This is traumatic and may result in them never investing in stocks again, which is a worse outcome than if they had invested later in life with greater knowledge, experience, and resilience.

It is not fair to a student to advise an objectively superior course of action when it will lead to financial ruin because the student is not ready.

2. Educate in Arithmetic and Statistics

When the odds are in your favor, it’s only “gambling” if the consequences are disastrous.

Recent evidence suggests that mathematical education may be more important than financial education. The ability to perform mental computations is important, as well as skill with picturing compound interest and percentages. Understanding risk and reward over time is critical. Anyone with a complete understanding of gambling mathematics should know that as you gamble more, you get closer and closer to a guaranteed loss of money.

Investing in the whole global stock market, on the other hand, is neither speculation nor gambling because the odds are in your favor and the consequences of loss are temporary. Although the market declines in about 25% of given calendar years, over longer spans it almost surely increases from the starting point.

Insurance companies make money because they pay out less money than they take in. On average, the odds are in their favor. For any one individual or family, however, the consequences of losing the bet are disastrous. This is why it is wise to purchase health insurance, term life insurance, auto insurance, et cetera. You are insuring against uncommon yet disastrous events. Nonetheless, these disastrous events are much more likely to occur than winning a large lottery jackpot. On the other hand, purchasing insurance against minor losses, like a SquareTrade warranty or collision insurance on a car, is only necessary if these items are critical to you and you do not have the funds to replace them.

3. Make Choices Simpler

Don’t do business with businesses that put bad choices on the table. (Unless you are beating them at their own game.)

People often ask why one should pick Vanguard over Fidelity, Charles Schwab, or another firm for directing their investments. Although Fidelity and Schwab do offer low-cost index funds and arguably offer superior customer service, they are also determined to sell you on products and services that are very bad for your financial health, such as actively managed investments with high management fees.

It is an unpleasant and cognitively taxing experience to be required to repeatedly decline detrimental options. The extended warranties that are sold at the checkout counter at Best Buy are an awful deal. Likewise for trip “insurance” from your airline and GoDaddy’s upsells of inferior hosting services and over-priced options when all you want to purchase is a simple Internet domain name. It is bad enough when a business puts bad choices on the table; aggressive sales tactics are the coup de grâce.

This is why a hard rule of using cash instead of plastic is effective and beneficial for most consumers. The exception is if you are a “travel hacker” beating the credit card issuers at their own game. If you have to ask, you’re not a travel hacker. Simplifying the equation by avoiding the potential for making bad choices is worth losing a few benefits that are, by comparison, small. In some industries, all the major players violate this rule. However, when there an alternate option is available, it should usually be preferred (e.g., Vanguard, cash or debit cards instead of credit cards, etc.).

4. Inculcate a Habit of Inquiry

The squeaky wheel gets the grease.

There is plenty of information available easily via web search. For example, you can easily learn about investing, retirement accounts, or strategies for convincing your bank to waive an overdraft fee by searching Google. However, many people are not in the habit of seeking information nor asking for special consideration from a lender, bank, et cetera. There are differences between how subject-matter experts and novices seek information; novices may not know where to begin, and are typically unfamiliar with the jargon of personal finance, insurance, taxes, credit cards, mortgages, student loans, credit-reporting bureaus, and more. Therefore, it is unfair to blame them for failing to seek out information. Instead, we should educate them in the basics and encourage them to build a habit of inquiry, so they less likely to be shortchanged in their financial dealings.

In addition to educating others, we should lobby for laws and regulations that compel employers and financial institutions to conduct business in ways that do not unfairly disadvantage the non-wealthy (e.g., comprehension rules), and advocate for prosocial behaviors among employers, financial institutions, corporations, and governments that benefit the poor. For instance, it is unfair that many government benefits are not received by the most needy, due to being difficult to claim.

5. Focus on Long-Term Lifestyle Strategy

But, give tactical advice when appropriate.

Reducing bills, increasing income, and changing one’s habits is important. There are many forums and other websites about living frugally. In some ways this overlaps with Item 4; for example, one can save quite a bit on a car, phone or cable bill, rent, or terms of debt service by inquiring with sellers, service providers, landlords, and lenders. Responsible financial educators should encourage learners to (a) reduce expenses as a way of life (e.g., smaller living space, more roommates, no dining out, etc.), (b) focus on significantly increasing income by leveraging education, skills, et cetera, and (c) eliminate debts, save, and invest.

Financial education appears to be more effective when it either focuses on norms and general principles or is given tactically (i.e., “just-in-time“). The best time to tell someone how to write a check is immediately before they need to write a check. Financial advisers can serve as financial educators by offering key information and advice soon before significant financial events such as shopping for a house and mortgage. On the other hand, if this advice is offered many months or years in advance, it is neither remembered nor followed.

Optionally/additionally as a grammatical alternative to and/or when the prior item(s) are essential

The grammatical construct “and/or” is frequently criticized for being unnecessary and/or ambiguous.

As a logical operator, when used in a list of two things (e.g., rice and/or beans), it implies that it is acceptable to have:

  • Item 1
  • Item 2
  • Items 1 and 2

However, having no items is unacceptable.

When used in a list of three things (e.g., rice, beans, and/or salsa), it implies that it is acceptable to have:

  • Item 1
  • Item 2
  • Item 3
  • Items 1 and 2
  • Items 1 and 3
  • Items 2 and 3
  • Items 1, 2, and 3

However, having no items is unacceptable.

This, obviously, is quite vague. Some have suggested just using “or” instead of and/or. However, “or” is also ambiguous in common language. This may be why APA style tolerates and/or, neither endorsing nor forbidding it.

Due to its vagueness and a lack of viable alternatives, and/or is used in many situations where it does not apply. One common instance is using and/or when you really mean to say “this item can be added, but the prior items are essential.” To address this, I propose a new grammatical construct: optionally/additionally.

Optionally/additionally has all the slashy goodness of and/or, but an air of sophistication. Sure, you could just say “and optionally,” but this isn’t strong enough at conveying that the subsequent item or items are optional add-ons, while simultaneously conveying that the prior item or items was/were essential.

For instance, when suggesting how to invest in equities, I would advise investing in a mutual fund of the whole U.S. stock market and optionally/additionally the whole international stock market (encompassing the whole world except the United States—the US is about 50% of the global market by market capitalization and all other countries sum to about 50%).

I would not want to say “the whole U.S. stock market and/or the whole international stock market” because the first item is essential, while the second item is not (depending on how bullish you are on the United States).

Of course, there are index funds that combine both the U.S. and international markets. For the equities portion of a portfolio, it would be fine to suggest investing in the whole U.S. stock market or the whole world stock market, but if we replace “whole world” with “international” (all other countries except the US), neither “or” nor “and/or” are acceptable, because both imply the first item is optional rather than mandatory. This is an example of when the optionally/additionally construct is useful.

I did not do extensive research into whether someone else has addressed this conundrum of grammar and logic. Please reply if you know of such sources. A Google search shows that optionally/additionally has been used three times before, but without elaboration on the grammatical or logical implications:

  1. On 2010-03-14, “GrapefruiTgirl” made this statement on the forum: Optionally/additionally, as your regular user, enter your ~/.fonts folder (or create it of there is none) and repeat the above three commands as regular user.
  2. On 2010-04-25, Michael S. from Vienna, Austria made this statement on TripAdvisor: Take the first train to Innsbruck which is a nice little city surrounded by majestic mountains. The city has a small but fine city center and you can easily and quickly go up to 2.300m above sea level by ropeway. Ex Innsbruck you could optionally/additionally visit the Karwendel Area with places like Seefeld and Mittenwald. The Karwendel Railway is known for spectacular views. Prepare for a long day but it is feasible!
  3. On 2016-11-15, “horst” made this statement on the application programming interface (API) discussion board in the ProcessWire content management system (CMS) forum: Optionally / additionally interesting in this regard maybe the weighten option of Pia here.

From these examples it appears optionally/additionally is most relevant to fastidious Austrians and computer programmers, but its slashy goodness remains undiscovered by the rest of Googleable humanity. A search of additionally/optionally reveals more than 20 uses, but I prefer emphasizing the optionality before communicating the supplementary nature of the subsequent items (and, consequently and implicity, the necessity of the preceding items), so additionally/optionally is of less interest to me.

Thoughts on being a university instructor (graduate teaching associate)

While earning an Education Ph.D. at University of Central Florida, I have worked as a teaching assistant and now teaching associate for a course called EME 2040: Introduction to Technology for Educators. In the past two semesters (Fall 2017 and Spring 2018), this means that I have been the instructor of record for 140 preservice teachers as they take this required course in pursuit of their four-year education degrees, with slightly more than half of these students majoring in elementary education.

The two sections I have taught in each semester have both been mixed-mode with 35 students each, with much of the students’ work being completed from home and submitted online, but with biweekly face-to-face (F2F) meetings. The scope of the course is quite broad, covering the basics of computers, the Microsoft office suite, searching online, emerging technologies, curricular and pedagogical integration of technology, and many other issues.

Although I have obviously made it widely known that I am instructing the course, based on my LinkedIn, Twitter, Facebook, et cetera, I have not yet written about the experience of doing so.

Teaching is certainly my favorite part of being a doctoral student. It’s a lot of work and responsibility, but I was prepared well by TA’ing (being a teaching assistant) for my supervisor for an entire year. Being actively involved in Toastmasters for several years, including being president of a club, helps me to not be afraid of speaking, and gives me presentation experience.

On the other hand, it is difficult to be a teacher educator without K–12 teaching experience, who barely looks older than his students (I am Age 26, but many say I look younger). My technological knowledge is impressive, and I do have pedagogical knowledge from my studies as an Applied Learning & Instruction M.A. student (completed 2016), but it can be hard to pull it all together for the students.

Here, I will briefly share a few observations and thoughts from my experience so far.

First, a bit of context: UCF uses the Canvas learning management system (LMS), and the materials for my course are prepared by the course faculty shepherd and my doctoral advisor and supervisor, Dr. Richard Hartshorne (yes, it is confusing in meetings as we both have the same first name). Presently, there are six sections of the course offered in each of the 16-week semesters (fall and spring), of which four others are taught by four adjunct instructors, and three of those sections are fully online, with the fourth and my two sections being mixed mode (in Summer 2018, I will teach a fully online section).

For our F2F meetings we use the following classroom at the UCF Teaching Academy, which has a desktop PC for every student (photo courtesy of UCF):

UCF TA 303

The room has 36 PCs including the instructor’s, so UCF is maximizing the room’s value by enrolling 35 students. However, face-to-face meetings usually have lower attendance as students can learn about and do much of their work online in the LMS.

I also borrow about a third of my slides from Dr. Hartshorne for the F2F meetings, while making the rest on my own. Here is a set of my favorite slides from one of our last meetings of the semester, posted to SlideShare as “Thripp EME 2040 Slides on Microsoft Education Badges, PowerPoint Quiz, Computer Backups, and Digital Security.” Like many instructors, my slides are text-heavy out of laziness (incorporating images and synthesizing text into bullet points is hard work). But, the course is quite applied; during much of class time I am demonstrating how to do things with PowerPoint, Excel, Weebly, LinkedIn, MindMeister, et cetera using the overhead project which projects my PC’s screen.

It may surprise some that I am actually inclined to be a rather “easy,” forgiving instructor. Although students definitely have to do the work to earn an A in the course, I am more concerned with them learning and applying principles of pedagogy and design, as well as big-picture technological knowledge. This is my aim even if they do not get it right the first time.

Influenced by Schimmer’s persuasive essay, I got rid of late penalties in Spring 2018, as well not requiring attendance. In some ways this backfired, as attendance was low on several meetings, which leads to students not submitting assignments that follow the instructions, even though they are all posted online. Also, many students waited until pretty late to do a big chunk of the work, although not having late penalties also seems to inspire just as many students to work ahead and finish the course early!

My rationale for not taking attendance is probably as trite as the rationales for requiring it. College students are usually adults and preservice teachers, especially, should demonstrate self-regulation. I am actually quite hard on myself so when I see students not attending or leaving early, I chalk it up to failure on my part to capture their attention or teach them something useful. However, in some ways a course like this does not necessarily need F2F meetings, and in fact, the students who attend religiously tend to be the ones who follow directions and put in more effort anyway. This makes grading hard, as submissions from non-attending students often require revisions, not just because they did not come to class, but because they approach their studies differently.

We do have a textbook on technology, with quizzes and an exam derived from the publisher’s test bank, but like with many mixed-mode and online courses, these are delivered unproctored through the LMS. I feel it necessary to explicitly instruct the students that the assessments are open-book. Sure, I could say they are closed-book, but in a way this penalizes honest students with no repercussions for those who reference the web or textbook. I could also offer no guidance on the issue, but this results in the same problem. At the same time, there is a time limit of 1–2 minutes per question (on average), so studying in advance is advised.

As a specialist in financial issues, I am abundantly aware of the costs that college students incur. Although not widespread, a few students fail each semester due to disappearing—they do not participate, respond to messages, nor withdraw from the course. This is disappointing and quite negative. I partly summed this up in this excerpt from an announcement to students late in the Spring 2018 semester:

Please do what you can to take the quizzes/exam and submit assignments, even if they are suboptimal, as it is a shame to leave these points on the table. Even if you are leaving college, it is better to have a higher grade as your grade point average (GPA) will follow you throughout your undergraduate studies if you return to college later, and will be a factor in graduate school admissions if you complete a 4-year degree in the future and apply for a Master’s, doctoral, or specialist degree program.

Another big issue is that these students may have student loans to repay, sans degree or even course credit. Like with damaged credit, failing courses is, in many ways, worse than having a blank college transcript. I, too, had problems getting through my undergraduate studies that damaged my GPA, and I only got to “reset” my GPA in graduate school. I think there are underlying psychological issues here… I speculate that students who are far behind on a course hesitate to even open the LMS or their email out of feelings of shame or regret. In the long run, this may be more damaging than having done the work in a “tough” class like physics, yet failing due to getting the steps and answers wrong.

While only 5% or less of my students fail each semester, there is a larger cohort that shirks part of their coursework, resulting in B’s and C’s where A’s were easily in reach. I am a habitual procrastinator, but since beginning at UCF in 2012, I always get something turned in on-time (usually earning an A as well—thanks in part to grade inflation). It is very sad that many do not make lemonade out of lemons (if procrastination can be likened to lemons).

Teaching EME 2040 is quite obviously easier in many ways than teaching K–12. Nonetheless, I do not offer much in the way of “stern” classroom management. Students listening to music during class or engrossed in their phones or unrelated PC activities are puzzling… why do they come to class at all? My predilection is toward chalking it up to my lectures being boring as hell, even though they are quite interesting to me—I am too interested in showing tools and tricks and discussing technical information rather than how to apply technology to K–12 (and mainly K–5) teaching. For the latter I lean on materials and guest appearances from my supervisor. Another issue, a decidedly first-world problem, is that a classroom with rows of desktop PCs for each student does not encourage F2F engagement or collaboration.

One of my goals is to teach students about copyright and fair use in a nuanced and practical way. This includes recognition that the majority of teachers do not follow the guidelines presented in the class, but that “setting the example” (i.e., social modeling) is a worthwhile pursuit. When I ask students to cite even public domain images, I explain that although not required by law, it informs the viewer that the image is public domain without them having to wonder. When talking about copyright infringement, the practical reality is that being sued is rare, cease and desist letters are more common, and even more important is staying out of trouble with supervisors. I cite university guidance and urge erring on the side of caution.

My vision for EME 2040 diverges from the state’s. The purported focus of the course is on use of technology in the classroom. I think the teacher’s personal use of technology for organization and productivity may be equally important. This is why I cover subjects like Evernote, email management, file management practices, password management, digital organization, and keyboard shortcuts. The dream, of course, is to get more done in less time. The reality often is that “spare” time just gets sucked up by more work. I ask many teachers, administrators, and professors a simple question: Do you get all your work done in under 40 hours per week? I have never heard anything but an emphatic NO! Educators are over-worked, and perhaps work-aholics as well. It comes with the trade.

A big challenge is grading somewhere around 1,000 assignments received from 70 students in a semester. Before, I was the TA to my supervisor sharing the workload with him, but now, I do it all myself. The practical reality is that giving detailed feedback on every assignment would lead me to becoming burned out. Instead, I opt for a policy that I can just give a paragraph or few lines of feedback for students receiving a 90% or above. I do focus on what they did well and what they could do better, but I only pull out the rubric if giving a B or below. I consistently type 100 words per minute, so I can write the feedback up quickly… watching students’ videos and reviewing their websites, PowerPoints, gradebooks, concept maps, et cetera is more work. But, I love it when so many of them go above and beyond the course requirements, and when their work introduces me to new subjects and perspectives.

As a technology instructor, it is surprising how much I prefer text as a medium of communication. I don’t like phone calls or video chats and finding images is hard. I would prefer writing a novella-length blog post to recording a two-minute video of myself. But, there is a place for text that is often lost in our push for multimedia integration. Any avid reader knows this.

I live about an hour from campus, so I put “by appointment only” for my office hours on my syllabus. I answer plenty of course messages and emails from students, but no one ever schedules an office meeting. The challenge, of course, is large, being a Ph.D. student teaching two sections of a course while trying to publish a manuscript and taking three doctoral courses at the same time. Many days, I wish I could just do the teaching job.

These thoughts were in no particular order, and obviously are not comprehensive. Hopefully they were an interesting insight into my work as a Graduate Teaching Associate.

Closing the Gaps for Gender and Socioeconomic Equality in the US and Bangladesh

This is my final paper, completed on 2018-04-25, for Dr. Judit Szente‘s course, EDF 6855: Equitable Educational Opportunity & Life Chances: A Cross-National Analysis, at University of Central Florida. It builds on my 2018-03-01 midterm paper, Women and Children in Bangladesh: The Effects of the Grameen Bank, the World Bank, and the Global Partnership for Education.

Closing the Gaps for Gender and Socioeconomic Equality in the US and Bangladesh
Richard Thripp
University of Central Florida

The purpose of this paper is to document gaps in gender equality, socioeconomic status, language, and race in the United States and Bangladesh, with a focus on diverse children and educational inequities. Then, an action plan is suggested for both countries. While the US is highly developed, the People’s Republic of Bangladesh, a densely populated South Asian country that borders India, is a United Nation’s “least developed country,” with many of the 163 million residents living in poverty. Nevertheless, there are many inequities in both countries.

Status Report

Here, I will discuss the current status of several equity issues in the US and Bangladesh.

The United States of America

Status of gender equality.

Pay and occupational power. At upper levels of corporations, organizations, and government, women are very much unrepresented (Barreto, Ryan, & Schmitt, 2009). Women are often not able to succeed due to discrimination, stereotypes, and childcare. Although the gender pay gap has narrowed during 1970–2000, this trend has stopped in the 21st century (Mandel & Semyonov, 2014), suggesting that further progress will be more difficult. While blatant economic discrimination is disappearing or going underground, the portion that remains is often due to childcare or other expectations reducing hours worked and constraining women’s schedules. Additionally, in the public sector, gender segregation is still widespread (Mandel & Semyonov, 2014).

Education. US achievement falls short compared to Finland, and students with lower income and minorities have worse outcomes (Spitzer & Aronson, 2015). Although females are better at writing, earn better grades, and earn more college degrees than males, they tend to become uninterested and unconfident in their abilities for science, technology, engineering, and mathematics (STEM) subjects as they move through secondary school (Spitzer & Aronson, 2015). This “math anxiety” is reinforced by sociocultural stereotypes of females being bad at mathematics, results in poor performance particularly on timed, high-stakes tests, and reinforces gender inequity over the long term, as it prevents many females from entering high-paying professions for which STEM skills are prerequisites.

Socioeconomic status. Equality of socioeconomic status has been deteriorating since the 1970s, with the wealthiest 1% accumulating an ever-increasing share of American wealth (Saez & Zucman, 2014). At the same time, the majority of Americans are saving little (the savings rate was actually negative during 1998–2008), taking on debt, and failing to invest in bonds, equities, or their retirement funds (Lusardi & Mitchell, 2007, 2011). Commonly reported measures conceal the inequality by focusing on median income rather than the median–mean gap in accumulation of wealth.[1] Low socioeconomic status has a negative effect on outcomes for women, children, and families. Even when looking at income, the US’s Gini coefficient, a measure of income dispersion (Yitzhaki, 1979), was 41 in 2013, indicating more inequality than many other countries including Bangladesh.

Issues related to language.

Language. The US has a large Spanish-speaking population, but research shows that they face inequity, even as early as kindergarten, where Spanish-speaking English learners are less than half as likely to be reclassified as English proficient than speakers of other languages (Slama, 2014). Additionally, about 22% of the sample Salma (2014) studied had to re-take kindergarten, and many more had academic difficulties later in primary school.

Numeracy. Another literacy issue is numeracy, or the ability to understand and work with numbers. Among American adults, 29% are below minimum levels of numeracy proficiency (UNESCO, 2017, p. 200),[2] with greater proportions being numerically illiterate among minorities, the poor, and the less educated. Overall, literacy on all fronts is a vital issue that contributes to civic engagement, friendships, financial gains, and parenting (UNESCO, 2016), and therefore, more focus on equity here is essential to tackling inequities in the US.

Issues related to race. In the US, race arguably sits at the intersection of academic self-efficacy, gender, socioeconomic status, and status as an immigrant (Bécares & Priest, 2015; Bondy, Peguero, & Johnson, 2017). Racial and ethnic minorities have a clear academic achievement gap, with immigrants, blacks, and Hispanic students faring worse. Overall, there is much progress left to be made in ensuring equity for these disadvantaged groups.

The People’s Republic of Bangladesh

Status of gender equality. Bangladesh is poor, highly populous, and prone to floods and cyclones, which often impact women and children worse, perpetuating inequality (UNESCO, 2016, p. 33). Although female educational attainment is rising, which has also had the positive outcome of reducing birth rates (UNESCO, 2016, p. 83), there is still a long way to go toward equality. For instance, wealthy Bangladeshi women are four times as likely to receive prenatal care than poor women (UNICEF, 2016, p. 20). Young girls are often married off before adulthood, and girls often have less access to education. However, on the positive side, Bangladesh is the home of the Grameen Bank (2018), a micro-lending institution that focuses on aiding women with their small businesses at relatively low interest rates. Nonetheless, although school attendance is up, thanks in part to the work of the Global Partnership for Education (2018), the World Bank, and UNESCO, Bangladeshi culture perpetuates gender inequality by discouraging school attendance as unfeminine, in part because of Islamic traditions (Miaji, 2010; Sarker & Salam, 2011).

Socioeconomic status. Inequality in socioeconomic status in Bangladesh is moderate (Gini coefficient of 32 as of 2010, a measure of income dispersion; see Yitzhaki, 1979). A good sign is that although private schools are common in Bangladesh, they actually charge the same low fees as public schools due to government funding (UNESCO, 2016, pp. 187–188). Promisingly, substantial efforts to educate rural and poor children have recently been undertaken by Bangladesh’s government and the World Bank (2017). However, in 2014, the upper secondary school completion rate was a paltry 19% (UNESCO, 2017, p. 129). Lack of education serves to perpetuate socioeconomic inequalities across generations. Moreover, although a standardized test at the end of primary school (Grade 5) has been introduced, the exam fails at measuring competence, does not have special resources allocated to it, and cannot even serve as a reliable measure of achievement (UNESCO, 2017, p. 133).

Issues related to language. Bangladesh is homogeneous, with the vast majority speaking Bengali. In fact, this shared language is a source of cultural and nationalistic identity (Mahboob, 2009). Although English has no official status, families with higher socioeconomic status are more likely to speak it, and it is frequently used in higher education, which contributes to inequity. Wealthier children may be advantaged by learning English earlier and more thoroughly, making them even more likely to succeed in college and in their careers.

Issues related to race. I was not able to locate research on race in Bangladesh. However, it is a majority-Muslim country with patriarchal ideologies, according to at least one commentator (Miaji, 2010). We may also speculate that religious minorities (e.g., Hindus) and racial minorities face discrimination in Bangladesh.

Action Plan to Close the Gaps and Achieve Growth

Here, I will lay out actionable steps the US and Bangladesh can take to address the issues.

The United States of America

Gender equality. Spitzer and Aronson (2015) show that social psychological interventions can be useful in countering stereotype threat and other subconscious beliefs. U.S. females already tend to do better in school than their male counterparts. Countering stereotypes about STEM ability and career fields may be critical to closing the gender pay gap. Another important area is in allowing paid time off for expectant and new mothers, both in the private and public sectors (Mandel & Semyonov, 2014).

Socioeconomic status. U.S. socioeconomic inequities are deeply rooted and require attack on many fronts. Personal financial literacy (Lusardi & Mitchell, 2011) is important and is lacking especially among the working poor. This might be addressed by targeted education programs before opening a bank account, receiving a loan, et cetera (Fernandes, Lunch, & Netemeyer, 2014). More importantly, additional government regulation of finance and related industries is needed to prevent institutions from taking advantage of the poor and middle-class (Willis, 2009). There are also many tax loopholes and schemes in the US that allow the wealthy to become even wealthier. Changing these laws may require campaign finance reforms that prevent politicians from receiving funds from wealthy donors, as these politicians go on to write laws that benefit the richest 1%. Finally, a focus on partly or fully subsidized access to medical care, education, housing, and other services for the poor and middle-class is needed.

Language. Although progress is being made in this area, elevating Spanish, the most common second-language in the US, to official status may be a step toward equity for Spanish speakers. This might be best pursued at the individual state level, as individual U.S. states have great authority in governance decisions and policymaking.

Race. Race issues often appear intractable, but continued activism and attention is needed to facilitate a move toward equity. Schools in U.S. states are often funded by property tax revenues, with wealthier whites congregating in suburbs to send their children to “good” schools, creating de-facto segregation that perpetuates advantages for whites while disadvantaging minorities. This could be tackled by changing the U.S. federal government’s Title I funding program to emphasize funding to minority schools, and by states pooling school funds and allocating them on a per-pupil basis rather than based on local tax revenues. Unfortunately, such changes are a politically intractable and many states have school funding mechanisms written in their constitutions or otherwise made inordinately difficult to change.

The People’s Republic of Bangladesh

More funding for education, if administered appropriately and equitably, is important to multiple issues of equity. In 2015, the Campaign for Popular Education appealed to Bangladesh’s prime minister to increase the education budget to 20% of the government’s annual budget by 2021 (UNESCO, 2017, p. 23). Pushing politicians and other people of influence for such commitments is important toward achieving equity. Similar methods were used to bring about the landmark Civil Rights Act of 1964 in the US.

Gender equality and socioeconomic status. One way to promote gender equality is to offer stipends for families whose girls consistently attend school (Hahn, Islam, Nuzhat, Smyth, & Yang, 2017). This not only contributes to gender equality, but also socioeconomic equality. Stipends can be targeted to at-risk females in rural areas and from poor families. Countering Islamic patriarchal culture (Miaji, 2010; Sarker & Salam, 2011) with progressive social-norms education and public advertising campaigns may also be of use. Encouraging women to start or expand small businesses (e.g., Grameen Bank, 2018) can promote gender equity via financial success. Overall, socioeconomic equality is aided by promoting educational attainment and offering public services and support to the poor. Some of these efforts are underway now (e.g., World Bank, 2017).

Language and race. Although I found limited research in these areas, prioritizing English education not just for wealth Bangladeshi people, but for the poor as well may be helpful. At the same time, there may be more pressing issues that would improve equity for the poor. Recognizing the importance of females’ education, employment, and self-identity is also critical, but requires a shift in religious ideology (Sarker & Salam, 2011).

Comparison Between the US and Bangladesh

Surprisingly, in some ways the US actually seems worse on measures of equity, despite being the world’s leading developed country. The US makes up about half the global economy with just 4% of the global population, yet on all dimensions we looked at (i.e., gender, socioeconomic status, language, and race), there are large inequities. For instance, the US’s Gini coefficient is higher than Bangladesh (41 vs. 32), showing that income inequality is larger in the US (Yitzhaki, 1979). While wealth inequality has increased since the 1970s in the US, in Bangladesh, great strides are being made among multiple dimensions—gender, education, and alleviation of poverty. Nevertheless, Bangladesh still has a long path ahead on the road toward being a middle developing country.


The issues I looked at here not only shed light on equity in the US and Bangladesh, but are also a useful framework to evaluate many nations’ progress toward equity along multiple dimensions. However, although these issues are important, it is paramount that global birth rates and carbon emissions be greatly reduced to prevent a climatic crisis in the coming century. Poverty alleviation, gender equity, and education all result in lowered birth rates. However, we have no practical solution for climate change and much of the damage has already occurred. Nevertheless, this should not be construed as an excuse to do nothing.


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Bondy, J. M., Peguero, A. A., & Johnson, B. E. (2017). The children of immigrants’ academic self-efficacy: The significance of gender, race, ethnicity, and segmented assimilation. Education and Urban Society, 49, 486–517.

Fernandes, D., Lynch, J. G., Jr., & Netemeyer, R. G. (2014). Financial literacy, financial education, and downstream financial behaviors. Management Science, 60, 1861–1883.

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Hahn, Y., Islam, A., Nuzhat, K., Smyth, R., & Yang, H.-S. (2018). Education, marriage, and fertility: Long-term evidence from a female stipend program in Bangladesh. Economic Development and Cultural Change, 66, 383–415.

Lusardi, A., & Mitchell, O. S. (2007). Financial literacy and retirement preparedness: Evidence and implications for financial education. Business Economics, 10(1), 35–44.

Lusardi, A., & Mitchell, O. S. (2011, June). Financial literacy and retirement planning in the United States. (Working Paper No. 17108). Washington, DC: National Bureau of Economic Research. Retrieved from

Mahboob, D. (2009). Bengali language movement. Retrieved from

Mandel, H., & Semyonov, M. (2014). Gender pay gap and employment sector: Sources of earnings disparities in the United States, 1970–2010. Demography, 51, 1597–1618.

Miaji, A. B. (2010). Rural women in Bangladesh: The legal status of women and the relationship between NGOs and religious groups (Doctoral dissertation). Retrieved from

Salma, R. B. (2014). Investigating whether and when English learners are reclassified into mainstream classrooms in the United States: A discrete-time survival analysis. American Educational Research Journal, 51, 220–252.

Sarker, M. F. H., & Salam, M. A. (2011). The roles of the World Bank and UNESCO in primary education in Bangladesh: A gender based analysis. Society & Change, 5(4), 7–20.

Spitzer, B., & Aronson, J. (2015). Minding and mending the gap: Social psychological interventions to reduce educational disparities. British Journal of Educational Psychology, 85, 1–18.

UNESCO. (2016). Global education monitoring report 2016: Education for people and the planet: Creating sustainable futures for all. Retrieved from

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UNICEF. (2016). The state of the world’s children 2016: A fair chance for every child. New York, NY: UNICEF. Retrieved from

Willis, L. E. (2009). Evidence and ideology in assessing the effectiveness of financial literacy education. San Diego Law Review46, 415–458.

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Yitzhaki, S. (1979). Relative deprivation and the Gini coefficient. Quarterly Journal of Economics, 93, 321–324.

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  1. In the US, accumulation of wealth (net worth) is far more unequal than annual income. Median statistics look at the 50th percentile, while mean statistics are the average of everyone. The mean on both measures is greatly skewed upward by the wealthiest 1% of Americans, and, in particular, the wealthiest 0.1%. [Go back]
  2. Although not in reference to direct quotes, in several places I include page numbers when citing lengthy UNESCO and UNICEF documents, for ease-of-reference. [Go back]

A Thematic Literature Review on Financial Capability and the Effectiveness of Financial Education in America After the 2008 Financial Crisis

I completed this literature review on 2018-04-23 for IDS 7500: Seminar in Educational Research (self-directed study) at University of Central Florida. I will need to expound upon it in my dissertation, which will be focused on financial education.

A Thematic Literature Review on Financial Capability and the Effectiveness of Financial Education in America After the 2008 Financial Crisis
Richard Thripp
University of Central Florida

The purpose of this literature review is to investigate Americans’ financial knowledge and capability since the 2008 financial crisis (also known as the Great Recession), by synthesizing empirical research and position papers into a thematic narrative, with a focus on the refereed publications of leading researchers in the financial education space, such as Lusardi, Mandell, Mitchell, Mottola, and Willis. Articles are included based on authorship and their relevance toward this objective, with additional articles gleaned from leading researchers’ citations. Because of the breadth of the relevant literature, the focus herein is on explaining and adequately substantiating phenomena, rather than systematic coverage.


Firstly, we should discuss the meanings of financial knowledge, financial literacy, and financial capability. These terms are inconsistently defined in the literature, but, generally, they are in order of scope. Financial knowledge relates to content knowledge and is often used as a proxy for financial capability (e.g., Lusardi, Mitchell, & Curto, 2010). Financial literacy additionally includes the ability to articulate one’s knowledge and apply it to real-life decisions (Vitt et al., 2000), while financial capability more prominently emphasizes improvement of one’s actual financial behaviors. A key distinction is that having financial knowledge does not actually mean one’s financial decisions will improve, and being taught about financial concepts does not mean that information will necessarily be retained. In the literature, financial knowledge and financial literacy are conflated or treated synonymously, while financial capability is often treated synonymous to financial literacy (Remund, 2010), but consistently refers to a construct more holistic than financial knowledge.


Before the Crisis

Based on fifteen years of Survey of Consumer Finances data, Hanna, Yuh, and Chatterjee (2012) found that consumer debt increased, with 27% of households having more than 40% of their income going toward debt payments in 2007 as compared with 18% in 1992. Although the time leading up to the Great Recession was prosperous, it was also marked by financial institutions’ heavy over-extension of credit which resulted in unsafe debt proportions among American households, and particularly among more highly educated households. These debts, combined with a stock market plunge and widespread job loss, compounded the negative effects for many American households, which persist even a decade later. The crisis also brought about a renewed focus on financial education.

Financial Education Movement

A movement in support of financial education emerged in response to the Great Recession. The Jump$tart Coalition for Personal Financial Literacy, a Washington, D.C. think-tank funded by the U.S. government and corporations like Charles Schwab and Bank of America, gained increasing clout. The organization’s National Standards in K–12 Personal Finance Education, now in its 4th edition (2015), increasingly became adopted by states and school districts throughout the US. While the movement gained momentum, several commentators complained about financial education on a theoretical basis—most notably, Willis (2008, 2009) who likens the movement to teaching citizens to represent themselves pro se in court or to perform their own medical procedures. More recently, Pinto (2013) argued that the movement is misguided in both its suggested implications and underlying assumptions. Later, we will see that unfortunately, there is also empirical support for this position.

Perceived Financial Capability

The National Financial Capability Study (NFCS) is a nationwide triennial survey of over 25,000 Americans that measures their financial position, attitudes, and content knowledge (for more information, see Mottola & Kieffer, 2017). It includes several questions asking respondents to rate their mathematical and financial abilities on seven-point Likert scales—we might refer to these questions as a proxy for self-perceived financial capability. An analysis of responses to these items in the 2009 NFCS survey shows a correlation between perceptions and actual financial knowledge (de Bassa Scheresberg, 2013), but also shows that Americans grossly overestimate their financial prowess. Such overconfidence can have detrimental consequences.

Measures and Proxies of Actual Financial Capability

Here, we will look at recent research on Americans’ financial capability, or proxies thereof (i.e., numeracy, financial knowledge, and financial behavior).


Numeracy, broadly, is the ability to understand and manipulate numbers, including basic mental arithmetic. These skills are closely associated with financial capability, yet sadly are consistently lacking among Americans, especially among those who are already financially at-risk such as senior citizens, women, and those with less educational attainment (Lusardi, 2012). A striking investigation is Lusardi and Mitchell’s (2007) analysis of 2004 survey data of Americans aged 51–56, which focused on three basic questions assessing numeracy. One asked how a $2 million lottery prize would be divided among five people, which was answered correctly ($400,000) by only 56% of respondents. More shockingly, a basic question on compound interest on a savings account over two years was correctly answered by only 18% of respondents, with most incorrect responses failing to consider the compounding effect. This shows that even older, wealthier Americans, close to retirement, have issues with basic mathematics, let alone complex financial decisions. Overall, quantitative literacy, an umbrella construct encompassing numeracy, has been shown to be significantly related to financial behaviors (Nye & Hillyard, 2013).

Financial Knowledge

Financial knowledge is often assessed by several questions first proffered by Lusardi and Mitchell (2011), which are actually quite simple, yet frequently answered incorrectly. The 2015 NFCS survey included these six content-knowledge questions:

  1. Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
  2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?
  3. If interest rates rise, what will typically happen to bond prices?
  4. Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per year compounded annually. If you didn’t pay anything off, at this interest rate, how many years would it take for the amount you owe to double?
  5. A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest paid over the life of the loan will be less.
  6. Buying a single company’s stock usually provides a safer return than a stock mutual fund.

Although the answer choices are all multiple choice or true/false, in the 2015 NFCS survey, only 28% answered Question 3 correctly, 33% answered Question 4 correctly, and 46% answered Question 6 correctly (Thripp, 2017). It appears that respondents cannot mentally compute compound interest, even when correct choices are as simple as “less than five years” with respect to Question 4, requiring no computation. For Millennials, financial knowledge is even worse than older groups (Mottola, 2014), and for all Americans, the micro and macro (e.g., Lusardi & Mitchell, 2014) effects are profoundly troubling.

Financial Behavior

Lusardi (2011) puts forth a literature review alongside an analysis of 2009 NFCS data. In part, her review notes the importance of financial literacy toward outcomes such as accumulating wealth, planning for retirement, taking on reasonable mortgages, and investing in equities via low-cost index funds. Then, an analysis of survey data reveals that about half of Americans report difficulties paying month-to-month bills, 51% have less than a three-month rainy day fund or no emergency savings at all, and a quarter have used high-cost borrowing such as payday loans. These are just a few of the many findings showing that Americans are living paycheck-to-paycheck with no safety net for unexpected events like job loss, a car breaking down, or unexpected illness (see also West & Mottola, 2016).

Gender differences. Mottola (2013) also used 2009 NFCS data to look at the gender gap with respect to credit card usage, finding that women tend to pay more interest and late fees, but suggesting that when controlling for demographics and perceived mathematical ability, the gender gap disappears. This shows that the gender gap in financial knowledge is multidimensional, relating to the gender pay gap and other inequities. It was seen in Chen and Volpe’s (2002) study that female college students have less motivation and confidence for learning about finance. These feelings of disempowerment may be related to mathematical stereotypes and may contribute to maladaptive financial behaviors such as aversion to saving (Garbinsky, Klesse, & Aaker, 2014).

Effectiveness of and Recommendations for Financial Education

When financial education works, it is often given “just-in-time,” such as requiring student loan applicants to complete relevant learning modules as a prerequisite for receiving their loan (Fernandes, Lynch, & Netemeyer, 2014). In addition, curriculum may be more easily remembered if based on benchmarks (“rules of thumb”) rather than complex decision-making criteria (Drexler, Fischer, & Schoar, 2014). This may result in improved financial decision-making subsequent to the course. At first glance, these suggestions may sound like common sense. However, in actuality most financial courses present complicated information in a lengthy format (e.g., a semester or school year), far in advance of when the insights are needed. Fernandes et al. (2014) conducted a sweeping meta-analysis of 201 financial education studies, which showed only 0.1% variance in financial behavior accounted for by financial education. In fact, the effects were weaker for those with low-income—who have the most to gain from increased financial capability, and any effects that were present generally dissipated within 20 months regardless of the length of the instructional intervention.

Although not refereed and sponsored by a corporation, Menard (2018) presents a cogent narrative about the history of American financial education and its ineffectiveness toward inciting behavioral change, citing leading researchers on financial education, psychology, and behavioral economics, while leveraging her past work on behavioral healthcare interventions (e.g., smoking cessation). Overall, despite doubling as a sales pitch for Questis, Menard (2018) points to financial coaching, just-in-time teaching, and behavioral interventions as alternatives to financial education courses that lack impact (e.g., Fernandes et al., 2014).

Hastings, Madrian, and Skimmyhorn (2013), in a narrative literature review exploring measurement of financial knowledge and the effectiveness of educational interventions. They note that while financial literacy is correlated with many beneficial financial behaviors, “the evidence is more limited and not as encouraging as one might expect” (p. 359) when it comes to financial education’s causal impact on financial outcomes. In fact, if we turn to Mandell’s prolific research (Mandell, 2006, 2009, 2012; Mandell & Klein, 2009), we see that high school students’ participation in lengthy financial courses failed to improve financial knowledge, let alone financial outcomes. Despite being a lifelong researcher and proponent of financial education, Mandell (2012) concedes that K–12 and college financial courses simply do not work, at least as presently conceived. This lends surprising credence to Willis’s long-held contention (2008, 2009, 2017) that financial education is useless and detrimental, standing in stark contrast to Lusardi’s (2011, 2017) conviction of its necessity. In fairness, a balanced conclusion is that financial education can be useful, but must be easily digestible and of immediate relevance (Drexler et al., 2014; Fernandes et al., 2014). Sadly, this is not a characteristic of the Jump$tart Coalition (2015) standards on which many financial courses are based.


Chen, H., & Volpe, R. P. (2002). Gender differences in personal financial literacy among college students. Financial Services Review, 11, 289–307.

de Bassa Scheresberg, C. (2013). Financial literacy and financial behavior among young adults: Evidence and implications. Numeracy, 6(2), 1–21.

Drexler, A., Fischer, G., & Schoar, A. (2014). Keeping it simple: Financial literacy and rules of thumb. American Economic Journal: Applied Economics, 6(2), 1–31.

Fernandes, D., Lynch, J. G., Jr., & Netemeyer, R. G. (2014). Financial literacy, financial education, and downstream financial behaviors. Management Science, 60, 1861–1883.

Garbinsky, E. N., Klesse, A.-K., & Aaker, J. (2014). Money in the bank: Feeling powerful increases savings. Journal of Consumer Research, 41, 610–623.

Hanna, S. D., Yuh, Y., & Chatterjee, S. (2012). The increasing financial obligations burden of US households: Who is affected? International Journal of Consumer Studies, 36, 588–594.

Hastings, J. S., Madrian, B. C., & Skimmyhorn, W. L. (2013). Financial literacy, financial education, and economic outcomes. Annual Review of Economics, 5, 347–373.

Jump$tart Coalition for Personal Financial Literacy. (2015). National standards in K–12 personal finance education, (4th ed.). Retrieved February 6, 2017, from

Lusardi, A. (2011, June). Americans’ financial capability (Working Paper No. 17103). Washington, DC: National Bureau of Economic Research. Retrieved from

Lusardi, A. (2012, February). Numeracy, financial literacy, and financial decision-making (Working Paper No. 17821). Washington, DC: National Bureau of Economic Research. Retrieved from

Lusardi, A. (2017, March 9). Remarks by Annamaria Lusardi, Academic Director of the Global Financial Literacy Excellence Center at the George Washington University School of Business. Meeting of the Security and Exchange Commission Investor Advisory Committee. Retrieved from

Lusardi, A., & Mitchell, O. S. (2007). Financial literacy and retirement preparedness: Evidence and implications for financial education. Business Economics, 10(1), 35–44.

Lusardi, A., & Mitchell, O. S. (2011). Financial literacy around the world: An overview. Journal of Pension Economics & Finance, 10, 497–508.

Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52, 5–44.

Lusardi, A., Mitchell, O. S., & Curto, V. (2010). Financial literacy among the young. The Journal of Consumer Affairs, 44, 358–380.

Mandell, L. (2006, April). Financial literacy: If it’s so important, why isn’t it improving? (Issue Brief No. 2006-PB-08).

Mandell, L. (2009, January 4). The impact of financial education in high school and college on financial literacy and subsequent financial decision making. Paper presented at the meeting of the American Economic Association, San Francisco, CA.

Mandell, L. (2012). School-based financial education: Not ready for prime time. CFA Institute Research Foundation, 2012(3), 107–124.

Mandell, L., & Klein, L. S. (2009). The impact of financial literacy education on subsequent financial behavior. Journal of Financial Counseling and Planning, 20(1), 15–24.

Menard, M. B. (2018). So many courses, so little progress: Why financial education doesn’t work—and what does. Questis, Inc.

Mottola, G. R. (2013). In our best interest: Women, financial literacy and credit card behavior. Numeracy: Advancing Education in Quantitative Literacy, 6(2), 1–15.

Mottola, G. R. (2014, March). The financial capability of young adults—A generational view. Retrieved from

Mottola, G. R., & Kieffer, C. N. (2017). Understanding and using data from the National Financial Capability Study. Family and Consumer Sciences Research Journal, 46, 31–39.

Pinto, L. E. (2013). When politics trump evidence: Financial literacy education narratives following the global financial crisis. Journal of Education Policy, 28, 95–120.

Remund, D. L. (2010). Financial literacy explicated: The case for a clearer definition in an increasingly complex economy. The Journal of Consumer Affairs, 44, 276–295.

Thripp, R. X. (2007, April 4). Relationships between financial capability and educational attainment: An analysis of survey data from the 2015 National Financial Capability Study. Poster session presented at the University of Central Florida’s 14th Annual Graduate Research Forum, Orlando, FL. Retrieved from

Vitt, L. A., Anderson, C., Kent, J., Lyster, D. M., Siegenthaler, J. K., & Ward, J. (2000). Personal finance and the rush to competence: Financial literacy education in the U.S. Middleburg, VA: Fannie Mae Foundation.

West, S., & Mottola, G. R. (2016). A population on the brink: American renters, emergency savings, and financial fragility. Poverty & Public Policy, 8, 56–71.

Willis, L. E. (2008). Against financial-literacy education. Iowa Law Review94, 197–285.

Willis, L. E. (2009). Evidence and ideology in assessing the effectiveness of financial literacy education. San Diego Law Review46, 415–458.

Willis, L. E. (2017). The Consumer Financial Protection Bureau and the quest for consumer comprehension. The Russell Sage Foundation Journal of the Social Sciences, 3(1), 74–93.

Writing on finance, education, et cetera