Kids'
financial skill on decline
By
JOHN DELLA CONTRADA
Contributing Editor
Survey
results released last week by the Jump$tart Coalition for Personal Financial
Literacy and Lewis Mandell, UB professor of finance and managerial economics,
show that high school seniors know even less about personal finance
basics than they did five years ago.
The
good news is that more policymakers are sitting up and taking notice
of the problem, say Mandell and Jump$tart representatives.
On
average, 12th graders participating in Jump$tart's 2002 nationwide survey
answered 50.2 percent of the questions correctlya failing grade
based upon the typical grade scale used by schools (90-100 percent=A,
80-89 percent=B, etc.). In similar surveys conducted by the coalition
in 2000 and in 1997, the average scores were 51.9 percent and 57.3 percent
respectively. The researcher for all three studies was Mandell.
"If
there's a bright side, it's that the situation quantified by Jump$tart's
surveys has caught the attention of Congress, regulators and others,"
said Dara Duguay, the coalition's executive director.
She
notes that in February, the Senate Banking Committee held hearings on
adult and youth financial literacy. And earlier this year, President
Bush signed the "No Child Left Behind Act," which makes $385 million
in funds available for local educational agencies to use for "innovative
assistance programs, including activities to promote consumer, economic
and personal finance education."
"Our
hope is that the latest survey results will compel high-school superintendents
to place a high priority on funding innovative personal-finance education
programs when applying for the money," said Duguay.
Support
for innovative education is welcome news to Mandell, who believes a
major factor affecting the Jump$tart survey results is how the information
is taught. More than one-quarter (28.8 percent) of this year's survey
respondents had participated in a stock market game, where students
"invest" hypothetical money in simulated Wall Street trading. Students
who participated in a high school stock market game scored better on
the survey (52.4 percent) than did students overall or those who completed
other courses in money management or economics.
"Teaching
personal finance is like teaching students how to use computers," said
Mandell. "In both cases, students learn by doing and in both cases,
the subject has immediate relevance to their lives if taught effectively."
Other
findings from the survey:
- The
average score for Caucasian students was 53.7 percent, compared with
50.6 percent for Asian Americans, 44.8 percent for Hispanics, 42.1
percent for African Americans and 45.5 percent for Native Americans.
Males averaged slightly higher scores (50.7 percent) than females
(49.7 percent). Students from the Midwest scored higher (53.5 percent)
than students from the Northeast (50.5 percent), the West (48.8 percent)
and the South (48.6 percent).
- A comparison
of results from the 2000 and 2002 surveys shows a decline in the percentage
of students who do not use a credit card (from 69.1 percent to 67.8
percent) and who do not use their parents' credit card (from 18.3
percent to 15.4 percent). However, there was an increase in the percentage
of students who have their own credit cards (from 9.2 percent to 12.1
percent) and an increase in the percentage of students who have an
ATM card (from 31 percent ot 35.9 percent).
- Nearly
75 percent of the students have a savings and/or checking account
with a bank. The 25.7 percent of the students without any bank account
scored lower (46.1 percent) than those who have a savings account
(51.7 percent), a checking account (50.5 percent) and both savings
and checking accounts (50.2 percent).
- Slightly
more than one-third (35.1 percent) of this year's students knew that
retirement income paid by a company is called a pension, down from
46 percent in 2000 and 63.5 percent in 1997. In addition, 33.3 percent
thought such income was Social Security, up from 30.3 percent in 2000
and 29.2 percent in 1997.
- While
almost 60 percent of the students knew that sales tax "makes things
more expensive to buy," nearly one-quarter (21.2 percent) thought
there was a national sales tax of 5.5 percent. Seventeen percent thought
the federal government will deduct it from paychecks and 3.7 percent
thought the tax didn't have to be paid in cases where income was very
low.
The
Jump$tart survey, conducted this past December, January and February,
consisted of a written 45-minute examination administered to 4,024 12th
graders in 183 schools across the U.S.
A
copy of the survey questionnaire is posted on the coalition's Web site
at http://www.jumpstart.org in
the "downloads" section.