High school seniors don't know enough to make well-informed
financial decisions and need more instruction in personal finance,
according to a recent survey of thousands of students.
The seniors had an average score of 52.4 percent on
the 2005-06 JumpStart Coalition's biennial survey that tests 12th-graders'
knowledge of personal finance basics. The coalition is a national
association that promotes the teaching of personal finance.
The score is one-tenth of a point higher than the
last survey's score. In fact, average scores have remained in the
low 50s since the average dropped from 57.3 percent in 1997-98.
"It's too small to be
statistically significant, so what it means to me is that there
hasn't been any change," says Dr. Lewis Mandell, a professor
of Finance and Managerial Economics at SUNY Buffalo School of Management
who conducted the Merrill Lynch-sponsored test.
The written survey was presented
in December and January at 305 high schools in 37 states. Teachers
administered the test primarily in English and social studies classes.
"We target students in classes other than finance
and money management because we are testing general financial literacy
and not what students can recall from a financial management course,"
says JumpStart Executive Director Laura Levine in a written statement.
Levine says the increased participation -- 5,775 students
in total participated -- indicates that "educators across the
country are beginning to recognize the importance of financial literacy
and the need for financial literacy education."
The students faced questions such as: "Which
of the following instruments is not typically associated with spending:
cash, credit card, debit card, certificate of deposit?" and,
"Many savings programs are protected by the federal government
against loss. Which of the following is not: a bond issued by one
of the 50 states, a U.S. Treasury Bond, a U.S. Savings Bond, a certificate
of deposit at the bank?"
(Want to see how you compare to the high school seniors?
you pass a personal finance test?" for a short version
of the survey questions.)
Mandell says the survey raised
an important question. "What we don't know is why kids who
have a class in personal finance don't do better."
He believes these students are either not learning
or not retaining the information even though more students have
taken a personal finance course.
"The survey found that the students haven't scored
higher than the overall average score. Of all the studies that we've
done, the results have been consistent. We're not saying that the
kids don't know more on the day of the final than the day of the
class. But as opposed to other courses that we teach it's important
that they remember this stuff."
Additional findings showed students, overall, didn't
grasp important concepts such as stocks.
Only 14.2 percent of students felt that stocks would
have the highest growth over periods of time as long as 18 years,
despite the fact that there hasn't been an 18-year span when this
was not true. This is the lowest the score has been in the history
of the survey.