Skip to main content

More econ vs. personal finance

I loved this title of a recent post at Get Rich Slowly: If Personal Finance is Easy, Why Isn’t Everybody Rich? The post talks about the fact that getting rich is about more than just knowing what to do - it's just as much, if not more, about whether you are emotionally and mentally able to do what you know you need to do:
Human beings are complex creatures. Some of us are highly logical. Some of us are emotional. Most of us fall someplace in between. We rarely make decisions based on optimal paths; more often, we choose what makes us happy in the short term. I’m not saying that this is the right thing to do — it’s just what happens. For those who routinely make financial decisions based on emotion, it can be difficult to turn things around.
This is why I believe it is much more important for high school students to be well-trained in economics, before we start worrying about their knowledge of personal finance. Economics puts human behavior front and center, pointing out over and over that whether you want to admit it or not, life involves trade-offs. I simply don't think that knowing the 'rules' of good personal finance will be much help to someone who doesn't truly understand the more foundational concepts of opportunity costs and cost-benefit analysis.

Related posts:
Economics vs. personal finance
Choice and responsibility: self-help or just good economics?

Comments

  1. I agree that econ is a good basis for an education in finance, but I think people can learn the basics without having to understand economics. Really you just have to teach them to invest for the longterm, the problems with collecting debt and various products that people can invest in. I think that's probably all most people need.

    ReplyDelete
  2. My concern isn't so much that people can't understand the basics of finance without economics - I absolutely agree that they can. But there are a lot of people who presumably 'know' what to do but don't actually do it (at least, that was the point of the post on Get Rich Slowly) and I think economics is more about training people to make better choices. My original post was also more about whether financial education should replace economics education in school curriculum - given those two options, I think econ is more useful since it is the foundation for finance plus a lot more.

    ReplyDelete
  3. "People know what to do and don't do it"
    We can say the same thing about learning or knowing anything, couldn't we? I mean information abounds about the consequences of not exercising, smoking, eating too much bacon and ice cream. We observe people who appear to make smart decisions in some arenas but don't make them in others. Psychologists likely have answers, religion does too, maybe even sociology. It's one of those human condition things that makes education such a messy endeavor.

    I wouldn't reduce it to "motivation" either, there are just too many ways to slice that concept and it can't account for a lot of examples.


    One way to think about it, is to think about metacognition (thinking about thinking) or in this case, thinking about learning. If you'd agree that we do most of our learning throughout life outside of classrooms and experientially, then it's an interesting thought experiment.
    There's something in helping students think about learning,when they've learned something and what they did, what facilitated that


    I heard this pearl of wisdom from a classmate, a 21 year old man (I'm 48) who's also very bright. We were talking about being efficient as a student and why we thought it was an important skill to have. He said, he's basically lazy, and doesn't want to spend any more time on anything than he has to. It completely resonated with me and I've taken that explanation on too.

    Two things about this story I'd like to share. First, he clearly thinks about thinking already at 21. It might be his personality type, or learning style (Gardner's intrapersonal). Second, I learned instantaneously from that exchange. It's a bit of knowledge, even wisdom, I immediately recognized as wanting. It's a piece of knowledge I know I'll share too.

    At the macro level, the issue might go something like this: We don't live in a culture that values education, really. We argue constantly about what it's purpose is.

    Also, there's an ongoing tension between Jacksonian and Jeffersonian ideals of democracy and education. The former underpins the idea that everyone should be educated. The latter sets the individual at the center, allowing for an elite class.
    If you believe that learning involves adopting identities, ways of thinking and believing then not learning can also be seen as resistance, rebellion and cultural pride. Class, race and gender have a lot to do with the decisions and desires to learn.

    This is a classic:
    Learning to Labour: how working class kids get working class jobs - Paul Willis (1977

    ReplyDelete

Post a Comment

Comments that contribute to the discussion are always welcome! Please note that spammy comments whose only purpose seems to be to direct traffic to a commercial site will be deleted.

Popular posts from this blog

What are the costs?

I came across an interesting discussion about a 19-year-old intern who was fired from The Gazette in Colorado Springs for plagiarism. There appears to be some controversy over the fact that the editor publicly named the girl in a letter to readers (explaining and apologizing for the plagiarism), with some people saying that doing so was unduly harsh because this incident will now follow her for the rest of her career. I was intrigued by this discussion for two reasons - one, it seems pretty clear to me that this was not a case of ignorance (as I have often encountered with my own students who have no idea how to paraphrase or cite correctly) and two, putting aside the offense itself, I have often struggled with how to handle situations where there are long-term repercussions for a student, repercussions that lead the overall costs to be far higher than might seem warranted for the specific situation. As an example of the latter issue, I have occasionally taught seniors who need to p

What was your high school economics experience like?

As I mentioned in my last post , I am asking my Econ for Teachers students to reflect on their reading by responding to discussion prompts. It occurred to me that it wouldn't be a bad idea for me to share my thoughts on those issues here and see if anyone wants to chime in. For this week, the students were asked to read the California and national content standards , an article by Mark Schug and others about why social science teachers dread teaching economics and how to overcome the dread, an article by William Walstad on the importance of economics for understanding the world around us and making better personal decisions (with some evidence on the dismal state of economic literacy in this country), and another article by Walstad on the status of economic education in high schools (full citations below). The reflection prompt asks the students to then answer the following questions: What was your high school econ experience like? What do you remember most from that class? How do

When is an exam "too hard"?

By now, you may have heard about the biology professor at Louisiana State (Baton Rouge) who was removed from teaching an intro course where "more than 90 percent of the students... were failing or had dropped the class." The majority of the comments on the Inside Higher Ed story about it are supportive of the professor, particularly given that it seems like the administration did not even talk to her about the situation before acting. I tend to fall in the "there's got to be more to the story so I'll reserve judgment" camp but the story definitely struck a nerve with me, partly because I recently spent 30 minutes "debating" with a student about whether the last midterm was "too hard" and the whole conversation was super-frustrating. To give some background: I give three midterms and a cumulative final, plus have clicker points and Aplia assignments that make up about 20% of the final grade. I do not curve individual exams but will cu