Janet Yellen Speaks Out on Inequality and Opportunity in America

2014-10-27 Yellen at FRB BostonLast week, the Chair of the Federal Reserve Janet Yellen spoke about inequality and opportunity in America. Her remarks were based on recent results from the Federal Reserve’s triennial Survey of Consumer Finances (SCF). The survey includes roughly 6,000 U.S. households and provides specific details about their income, wealth, and debt. This look at family balance sheets formed the basis for Chair Yellen’s remarks on inequality and economic opportunity in the U.S.

You can watch the video, read the full speech, and view the slides at the bottom of this page.

I wanted to highlight for you the four building blocks of economic opportunity that were identified by Chair Yellen in her speech, along with some supporting charts from the survey. In future posts, we’ll dive more deeply into the topic of inequality.

Four Building Blocks of Economic Opportunity in America

#1. Resources Available for Children

2014-10-24 Yellen 1 Fig 9Figure 9 above shows that access to quality early childhood education has improved since the 1990s, but it remains limited–41% of children were enrolled in state or federally supported programs in 2013.

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Students and Money – The 2012 PISA results

This week we wanted to take a deeper dive into the recent PISA financial literacy assessment by looking at the test framework and reviewing a snapshot of student performance across the 18 countries that participated.

What is Financial Literacy? – PISA Definition

Financial literacy is knowledge and understanding of financial concepts and risks, and the skills, motivation and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts, to improve the financial well-being of individuals and society, and to enable participation in economic life. (via)

The Students and Money Framework

The financial literacy assessment consisted of a total of 40 questions organized into three broad perspectives: content, processes, and context. Under each of these perspectives, four categories of questions were then identified. These 12 categories formed the PISA “framework” for measuring financial literacy, see table below:

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OECD PISA Looks at Students and Money and Asks: What’s the Level of Understanding?

The OECD PISA international assessment of financial literacy released last week reveals that around one in seven students in the 13 OECD participating countries and economies are unable to make even simple decisions about everyday spending, and only one in ten can solve complex financial tasks.

So, to answer the question posed in this post’s title: Not very high.

What was this study about?

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Looking for Evidence? The What Works Clearinghouse Can Help

IES What Work ClearinghouseIf you’ve ever wondered if a new teaching strategy, school improvement program, or educational policy actually works from an evidence-based perspective, then consider subscribing to the What Works Clearinghouse (WWC) Study Review series.  Every month (roughly) the WWC releases short (two-page) reviews of important educational studies by describing the intervention and the findings.

These high level snapshots of research are a quick read and point you to deeper information about the study’s details.  In addition – and this is the big value-add! – the WWC provides a rating of each study based on the scientific quality of the research design and analysis.

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A College Degree is Worth It, But Educate Yourself on Student Loans

This post is by guest writer Laura Choi, who is a Senior Research Associate with the SF Fed’s Community Development department.  Laura researches a variety of issues aimed at improving economic opportunities for low- and moderate-income communities.  Read her full bio here.

With graduation season upon us, it’s a great time to get your students thinking about the future. There’s no question that a college degree is becoming more and more of a necessity in today’s economy. A recent Econcepts blog post highlighted new research from the SF Fed showing that a college degree is a worthwhile investment for the average student as it leads to higher lifetime earnings.

At the same time, the news is filled with stories of individuals struggling to repay their student loans, and President Obama just announced new executive actions to “lift the burden of crushing student loan debt.”

But student debt doesn’t have to be crushing or scary, and a little information can go a long way in helping students make sound financial decisions when it comes to financing higher education.

Here are a few ideas that can help your students get a better understanding of student debt.

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Why financial literacy is more important than ever

It’s easy to become complacent about our finances with the vast number of websites, apps, and businesses available today that specialize in helping people manage their money.  Granted, technology can be a powerful partner in financial management, but it cannot replace a strong understanding of factors that should inform decisions about how, where, and when we spend our money.

Why is financial literacy more important than ever?

Our financial landscape has grown increasingly complex.  Before a young person approaches college or a career, he or she is faced with big decisions on how much money to borrow for tuition, how much to save, how to invest, and how to grow and protect their budding wealth.


Image via GW Today

Dr. Annamaria Lusardi, a professor of economics and accountancy at the George Washington School of Business, wanted to test how financially literate populations are, both in the United States and internationally.  What she found was surprising.  She discussed her research recently at a TEDx Foggy Bottom gathering.

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Why it Still Pays to Get a College Degree

Has the high cost of college tuition discouraged your students from considering college a viable option? A new study from our researchers here at the SF Fed suggests that a college degree is still a great investment for the average student.

Three Reasons to Get that Degree

1.  Higher Annual Earnings: Although common knowledge, it’s worth repeating – college graduates, on average, out earn high school graduates year in and year out. In 2011, the difference between annual wages of someone with a four-year degree and a person with a high school degree averaged $20,050. That’s a 61% earnings “premium” for having a college degree (see chart below).

Why it still pays to get a college degree Figure 1

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Our Education Advisory Group and their survey work with the flipped classroom model

We celebrate teachers all year for the work they do in the classroom for economic and personal finance education!  In honor of 2014 Teacher Appreciation Week, we wanted to put a bright and appreciative spotlight on the extraordinary teachers who make up our Education Advisory Group (EAG).

What is the SF Fed Education Advisory Group (EAG)?

2014 EAG croppedCurrently in its second year of existence, the EAG is a group of approximately 20 teachers from throughout the nine western states that comprise the 12th District. They work with us for a period of one year, providing feedback on content ideas, teaching activities, economic education resources, the use of technology, and best practices related to teaching about the Federal Reserve and the U.S. economy.  The EAG is a professional development opportunity for secondary and post-secondary educators who have a vested interest in economic and personal finance education.

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The Cash Lifecycle

You may not know this about the Fed, but we do more than monetary policy.  We also play a central role in the nation’s payment systems. Reserve Banks keep enough currency and coin in circulation to meet public demand, provide check collection services to banks and other depository institutions, operate electronic payment systems, and provide financial services to the U.S. government and certain foreign institutions.  This week, we’re focusing on cash – past and present – and are also highlighting some of the work from our Cash Product Office.

Money, Money, Money

Cash stirs the imagination. It’s a driving plot element and character in thousands of books, movies, television shows, and songs. We think about it, dream about it, talk about it, work for it, save it, and spend it. At its most basic level, cash—currency and coin—is essentially a store of value for obtaining the goods and services you need for your daily life.

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