No, high school students do not need personal finance classes
In 2019, during my third year of teaching twelfth grade government and economics in North Carolina, the state government passed a law mandating “financial literacy” courses at the high school level. What’s controversial about this? Certainly, high school students would benefit from learning more about financial literacy. It is dubious, though, whether or not financial literacy classes would actually be useful, and these kind of tired mandates are oftentimes paired with a “pull yourself up by the bootstraps” subtext, assuming that bad financial decisions are the result of a lack of information.
In the recesses of internet comment sections, people often lament that students are not taught how to “balance a checkbook” (I am 30 years old and can honestly say I do not know what this means) or how to do taxes. My suggestion to high school students wishing to learn how to file their taxes: use Turbotax, like the rest of the adult population. (Just imagine, instead, a 40 year old teacher trying to walk a group of 17 year olds through filing taxes.) As far as investing goes, I would tell students to put their savings (if they have any) into index funds as young adults and then forget about it. (Few people actually beat the stock market).
Anyone who has either taught high school or raised a teenager, though, could also point to a second, glaring problem with financial literacy classes: would an 18 year old listen to your financial advice? And how relevant is your advice in a rapidly changing world? During one of my last years teaching government and economics, some of my students had started investing in Bitcoin. My belief then--and my belief now--is that Bitcoin is a bubble or a Ponzi scheme. When I heard some students were buying bitcoin, I did a lesson on bubbles and “Tulip mania.” My students predictably ignored my advice and kept their money in Bitcoin. A month later, the price of Bitcoin crashed (as bubbles do), and many students lamented losing money as the price of Bitcoin dropped from…$15,000 to $8,000. As a teacher, I felt quite smug. The irony is, had students continued to ignore my advice and bought Bitcoin at the peak of that bubble (as many did) and held onto it (as many did), that same Bitcoin would be worth several times more than it was worth then.
Economics and personal finance are not the same thing. Economics is the study of systems. It fits into the larger discipline of social studies--trying to understand the world and your place in the world. Personal finance is personal decision-making and would fit into the realm of health or physical education; it is about taking care of yourself.
Economics, at its best, raises questions about the nature of the economic world around us. It asks questions like, why is the “natural” rate of unemployment 5%? Should the Federal Reserve buy corporate bonds? Questions like these have major impacts on our personal financial lives and help us develop an intuition for financial decision-making. Unfortunately, the way economics is so often taught at the high school level is rote memorization of things like supply and demand, which is why so many people believe that it should just be replaced with something else that is rote, like financial literacy.
There are certainly things that could be taught in high school: developing good credit, opening a savings account, beginning investing, and creating a budget. But these could be taught in an afternoon-long workshop and should paired with experiences that allow students to practice these skills; giving students paychecks or real money to invest. But there is no need for a full course that students will likely not use or not need or not care about. And it certainly shouldn’t come at the expense of students actually participating in social studies and understanding the economic systems around them: things like systematic poverty and a lack of access to affordable healthcare.
Financial literacy courses place the onus of economic conditions on students’ actions, when in reality, I could predict students’ economic outcomes based on their parents’ socioeconomic status and their zip code. Rather than addressing blatantly predatory practices by credit card companies, for instance, financial literacy mandates are based on the belief that merely presenting information will change people’s lives.
These mandates are rooted in a system that ties financial decision-making to morality and blames poor folks for being poor. They, for example, discount research by behavioral economists that argues that mental depletion can lead to poor financial decision-making. It assumes people make bad financial decisions because they are unaware, not because they can’t (because, for instance, they are 18 years old and their frontal lobes are not yet fully developed). It reeks of the same attitude from some media outlets that insist you can pay off all of your student loans if you just manage your finances well--oh, and have your parents gift you a condo.
What if instead of a financial literacy class, we taught a behavioral economics class? Or a history of the economy class that helped students to understand the system they live in and how their choices are constrained by systems. Rather than giving students trite diatribes about what they ought to do, we should empower them with the knowledge to understand themselves and their world better.
In reality, droll comments about financial literacy needing to be taught in schools are not about financial literacy--it’s about putting the onus of economic systems on young people most impacted by economic structures. Rather than teaching students how to change the system, we pretend that the system is indelible and that they are to blame for any of their financial problems.
Poor kids will get the “financial literacy education” while rich kids will continue to get a robust economics course; poor kids will be excluded from learning about the systems that actively keep them in their place, and instead get fed personal uplift narratives that places the burden of these systems on their personal choices.
