What happens when you mix brilliant economic minds and keen educators? An enthusiastic day of discussion, questions, professional development, and yes – even some fun! We recently hosted 70 educators from throughout the 12th District at our head office in San Francisco for Meet the Experts (MTE), a speaker series designed to provide secondary and post-secondary educators with an opportunity to interact with leaders from throughout the Bank.
With MTE, our objective is to highlight emerging issues in the economy and foster greater understanding about the roles and responsibilities of the Federal Reserve. See how we strove towards that goal with the day’s agenda. Remember to return to this blog in the following weeks as we’ll be providing tips for discussing this year’s MTE topics with your students.
Kevin Lansing presented on asset bubbles
The day started off with a dive right into economics content and a very timely topic: asset price bubbles. Kevin Lansing, Research Advisor for our Economic Research group, took the audience through a brief history of bubbles (notably the Tulip Mania bubble from 17th century Netherlands), then touched on three points that explain bubbles: forecasts based on past price movements, social dynamics and human emotion, and market structure. Kevin also discussed policy implications of lessons learned from price bubbles. His presentation slides are here.
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:
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?
If 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.
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.
If you’re looking for a quick start into the issue of income inequality, our new DataPost series might just do the trick. The series uses a fairly simple comparison to define income inequality and chart that comparison over time. The full series includes: U.S. Household Incomes: A Snapshot, Median Household Incomes: Life in the Middle, and Income Inequality: Measuring the Gap.
To introduce the idea of income equality to your students, consider using the following three charts.
1. Income Distribution
The first place to start the discussion is by taking a look at the distribution of U.S. household incomes. The chart below gives the percentage of U.S. households in each income category. At the lowest end of the distribution, 3.4% of American households earned less than $5,000 in 2012. At the highest end of the distribution, 4.5% of American households earned $200,000 or more in 2012.
There are some interesting things to note about the shape of this distribution. First, there are more households in the lower income categories than you might expect. In a normal distribution – think the bell shaped curve – values tend to pile up in the middle. Here, though, there are greater concentrations at the low end of the distribution.
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).