State Curriculum Mandates and Student Knowledge of Personal Finance

By Tennyson, Sharon; Nguyen, Chau | The Journal of Consumer Affairs, Winter 2001 | Go to article overview
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State Curriculum Mandates and Student Knowledge of Personal Finance

Tennyson, Sharon, Nguyen, Chau, The Journal of Consumer Affairs

This study analyzes the relationship between high school students' scores on a test of personal financial literacy and their state's personal finance curriculum mandate. At the time of the testing, twenty of the thirty-one states included in the study had some kind of educational policy in the area of personal financial management. The results of the study show that curriculum mandates, broadly defined, are not generally associated with higher students' scores. However, students in states that required specific financial education course work scored significantly higher than those in states with either a general mandate or with no mandate.

The financial awareness and knowledge of American youth receives a great deal of attention in the academic arena and also recently in the popular press. Much available evidence suggests that teens are lacking in basic knowledge and understanding of personal finance principles such as spending and money management, saving and investing, and the use of credit and debt. In several recent, well-publicized studies, high school students scored poorly on tests on personal finance topics. In 1997 and again in 2000, the Jumpstart Coalition for Personal Finance Literacy administered a test of financial literacy to high school seniors. In 1997 students correctly answered only 57 percent of the questions on average, and in 2000 students averaged only 52 percent correct (Jumpstart Coalition 1997,2000). Similar results were found in earlier studies by the Consumer Federation of America (1991) and by Danes and Hira (1987). (1)

These findings, coupled with Americans' low rates of saving, heavy use of credit and high rates of bankruptcy, have fueled public concerns that teens need educational preparation to successfully manage their finances in adulthood. One public policy receiving increasing attention is to mandate the teaching of personal finance in schools. (2) Currently many students may graduate from high school having had no education in the subject area, as only a minority of states mandate its teaching in the public schools.

Before expanding curriculum mandates for personal finance education, it is important to consider whether such a policy is likely to achieve its desired goal. (3) Exhibiting greater financial management skill as a consumer is several steps removed from the receipt of personal finance education as a student. One critical concern is whether education will be effective in increasing student knowledge and whether increases in knowledge will translate into more effective consumer behaviors. Another important issue is whether mandating such education will increase or decrease educational effectiveness. Educational mandates should increase the number of students exposed to the subject area. However, mandates may have little impact if written into requirements without teaching directives or integration into existing curricula. Mandate effectiveness also could be compromised if mandates create negative learning environments or if teachers are untrained in the subject area. (4)

This study examines the relationship between existing state mandates for personal finance education and student knowledge of personal finance. The study analyzes scores on a test of personal financial literacy administered to a national sample of high school students to determine whether student scores are significantly higher in states with personal finance curriculum mandates. The premise underlying the study is that the variation in mandates across states may confound the finding of a simple relationship between mandates and student knowledge. Thus, the analysis distinguishes the various forms of states' personal finance curriculum mandates in seeking such relationships.


A large amount of existing literature on formal consumer education has addressed both the issue of educational effectiveness and that of mandate effectiveness. While the early results were mixed, many studies suggest that

formal consumer education significantly increases knowledge.

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