Here are the annotated bibliographies I prepared from 2016-01-14 to 2016-02-22 for my incomplete online course, Introduction to American Personal Financial Literacy. This course will not be completed.

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All Annotated Bibliographies by Richard Thripp [6 Credit Hours]

EDP 6936 Section 0M01: Spring 2016 – UCF, Dr. Michele Gill

Completed February 22, 2016

 

a) Citation [PROJECT # 1, FINANCIAL LITERACY COURSE, CITATION # 1]

Mandell, L., & Klein, L. S. (2007). Motivation and financial literacy. Financial Services Review, 16(2), 105–116.

 

b) Abstract:

This paper examines the hypothesis that low financial literacy scores among young adults, even after they have taken a course in personal finance, is related to a lack of motivation to learn or retain these skills. The research is based upon the latest national Jump$tart survey of high school seniors and uses financial literacy scores after controlling for socioeconomic, demographic, and aspirational characteristics that have historically predicted these scores. We analyze the relation of financial literacy scores to responses to three questions designed to measure motivation to be financially literate. We found that the motivational variables significantly increased our ability to explain differences in financial literacy.

 

c) Relation to Capstone Project # 1, Financial Literacy Course:

This paper reviews and interprets the results of financial literacy surveys developed by the Jump$tart Coalition for Personal Financial Literacy and administered to high school seniors 1997–2006. Lucey (2005) has established, with reservations, that these surveys have reliability and validity that is adequate for many purposes. However, the Jump$tart surveys remain among the best self-report instruments we have to measure personal financial literacy, which is unfortunate because there is much room for improvement.

Importantly, Mandell and Klein (2007) conclude that motivation is a key factor in explaining levels of financial literacy. The authors reflect on the fact that high school classes do not measurably improve financial literacy (pp. 113–114), relating this to results from the Jump$tart surveys indicating that students who talk about finances with their parents, have stocks in their name, or possess credit cards are not more financially literate than their peers (pp. 108–109). The authors lament that high school students might be more motivated if they fully understood the many social safety nets that have been removed from American life (pp. 109), such as the consumer protections that were dissolved under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Moreover, the authors cite research indicating that “targeted financial education” is efficacious, such as pre-purchase or credit counseling given to people before borrowing for a mortgage, student loan, auto loan, etc. (pp. 112–113). The implication here is that these consumers are motivated to apply what they have learned, rather than seeing it as something nebulous that does not apply to them. This is very important for my course; capturing students’ interest and conveying personal relevance will be essential to my course design, which will incorporate motivational theories from the ALIMA program.

 

d) Key Insights:

See above for key insights (combined with Relation to Capstone Project # 1 section).

 

e) Further Reading:

Hilgert, M. A., Hogarth, J. M., & Beverly, S. G. (2003). Household financial management: The connection between knowledge and behavior. Federal Reserve Bulletin, 89, 309–322.

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a) Citation [PROJECT # 1, FINANCIAL LITERACY COURSE, CITATION # 2]

Lucey, T. A., & Maxwell, S. A. (2011). Teaching mathematical connections to financial literacy in grades K–8: Clarifying the issues. Investigations in Mathematics Learning, 3(3), 46–65.

 

b) Abstract:

Most teacher education programs do not incorporate financial education preparations into courses required for early childhood, elementary education, and middle level candidates. The authors of this manuscript explore the reasons for this omission, particularly the mathematics education component, and clarify the issues surrounding this decision. They argue that financial education represents a valid curriculum concern and that inadequate personal finance literacy and mathematics standards exist. In addition, they discuss that elementary and middle schoolteachers generally lack understandings of the content, that teacher preparations inadequately educate teachers to teach about this content, and that a pedagogical shift is needed to affect meaningful change. They call for revisions of traditional mathematics pedagogies to address this challenge so that K–8 students may begin to exercise the responsibility for prudent financial decision-making that they will need in future years.

 

c) Relation to Capstone Project # 1, Financial Literacy Course:

Lucey and Maxwell (2011) contend that the methods American teachers use for teaching personal finance to elementary and middle school children are pathetic. For example, teachers tend to include decimalized dollar amounts such as $1.45 in their lessons to K–2 students, even though the requisite mathematical skills are not introduced until grade 4 at earliest (pp. 48)! According to the authors, this is both an issue of curriculum development and teacher education. Many textbooks “tack on” dollar figures to mathematical problems without any financial context (pp. 51–52). Elementary teachers are especially likely to lack the education and confidence to effectively teach financial skills to their students.

Being that my course under development is titled Introduction to American Personal Financial Literacy, I will not be assuming my students have extensive background knowledge. Therefore, much of the course materials and strategies used in my course will be of remedial level. It is thus appropriate to incorporate empirically supported suggestions for middle and high school education, and perhaps even elementary school. This article provides many useful ideas and several tables with topical suggestions (pp. 56) and suggested complexity–grade-level interactions (pp. 57–58).

 

d) Key Insights:

• Matching the needs of the learners is important and is perpetually difficult when developing “one-size-fits-all curricula” (p. 55).

• Current teachers learned mathematics in the 1980s and 1990s, when mathematical instruction was more basic, according to the authors (p. 49). Therefore, the authors allege these teachers did not learn the requisite background information to teach personal finance, at least during their primary and secondary educations.

• The authors say that “a pedagogical shift is needed to affect meaningful change” (p. 46). I love how the authors have attacked this issue from many sides, particularly with their focuses on better textbooks and improved teacher education.

 

e) Further Reading:

Way, W. L., & Holden, K. C., (2009). Teachers’ background and capacity to teach personal finance: A national study. Journal of Financial Counseling and Planning, 20(2), 64–78.

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a) Citation [PROJECT # 1, FINANCIAL LITERACY COURSE, CITATION # 3]

Seyedian, M., & Yi, T. D. (2011). Improving financial literacy of college students: A cross-sectional analysis. College Student Journal, 45(1), 177–189.

 

b) Abstract:

Financial literacy has become more important than ever as an increasing number of college students are relying on credit cards to finance their education. We examine whether college students are knowledgeable about finance, whether they improve upon that knowledge, and whether their demographic profile, financial backgrounds, and engagement/motivation level affect their financial knowledge and learning. Recruiting students who voluntarily participated in the pre- and post-tests of personal finance and managerial finance, and using multiple regression and the results of student course evaluations, we find that using finance courses positively affect the students’ financial literacy. Moreover, we find that gender difference is found only in the pre-test of managerial finance, that female students significantly improved learning, and that students in the upper level of finance courses overall outperformed those in the lower level in both tests of personal finance and managerial finance. We also find that students’ job experiences, financial background, attitude and behavior, and class participation and motivation determine the amount of their learning.

 

c) Relation to Capstone Project # 1, Financial Literacy Course:

Sevedian and Yi (2011) administered the entire Jump$tart Coalition financial literacy survey (30 questions) to about 50 undergraduate students, as well as eight questions relating to managerial finance. This was done at the beginning and end of the semester in managerial finance or portfolio management college courses. The sample was primarily Caucasian (80%) at SUNY Fredonia, a campus in the New York University system.

In my opinion, there are quite a few issues with the authors’ methods, such as the loss of 15 students between pre- and post-test (64 to 49), their conflation of results from three separate undergraduate courses, the use of a volunteer sample, and a tendency to cherry-pick data. Nevertheless, several results emerged which I believe will be valuable to my course development, which will be explored in the Key Insights section (below).

 

d) Key Insights:

• One question in the Jump$tart survey asks whether an elderly person with only Social Security income and little savings will have a hard time getting by, or will have it fairly easy by simply reducing expenses. Sevedian and Yi found that students who said such an elderly person would have a hard time performed much better on other questions relating to personal finance (p. 186). Therefore, developing realistic financial beliefs may be correlated with improved financial literacy.

• Owning a savings account was correlated with better performance on the authors’ pre-test of managerial finance (p. 186). Perhaps opening the savings account was an educating experience for these students? Did the banker advise them of the benefits of a savings account, or did they open the account online and read bank webpages first? Who knows? It is important to note the current climate of very low interest rates on savings accounts. Basically, savings accounts in the post-2008 era function basically as psychological devices; very little money is earned versus keeping your money in a checking account. How does this factor in?

• A comparison of post-test results reveals that students who were in BUAD 320(B), Managerial Finance II, performed better than students in BUAD 320(A), Managerial Finance I (pp. 187–188). Students in the second course also participated more and expected higher grades, according to the authors. They believe that participation and effort is positively correlated with financial literacy, at least with respect to financial courses.

 

e) Further Reading:

Roberts, J. A., & Jones, E. (2001). Money attitudes, credit card use, and compulsive buying among American college students. Journal of Consumer Affairs, 35, 213–240.

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a) Citation [PROJECT # 2, COMPANION PAPER, CITATION # 1]

Lucey, T. A. (2005). Assessing the reliability and validity of the Jump$tart survey of financial literacy. Journal of Family and Economic Issues, 26(2), 283–294. http://dx.doi.org/10.1007/s10834-005-3526-8

 

b) Abstract:

Financial education represents an area of popular interest, owing largely to the Jump$tart surveys of financial literacy. However, while the surveys represent indicators of financial knowledge among high school seniors, these measures have not been statistically validated. This article describes an assessment of the surveys’ reliability (internal consistency), and validity. It reports a moderately high degree of consistency overall, however, discloses low to moderate internal consistencies among subscales. It also finds significant response differences to one quarter of comparable items between surveys. The researcher observes challenges to affirming the surveys’ validity and offers statistics suggesting social bias among survey items. He calls for further research into measures of financial literacy.

 

c) Relation to Capstone Project # 2, Companion Paper:

From my initial readings, the Jump$tart survey kept coming up again and again in financial literacy research—it is obviously considered an important instrument for measuring personal financial knowledge. I looked for articles lending credibility to the survey, and while there were distressingly few, this article is strong and refreshingly skeptical. The Jump$tart survey is revised approximately biennially, and while its empirical support is somewhat tenuous, it appears to be the “state of the art,” so to speak, among survey instruments for personal financial literacy. Lucey (2005) finds that the survey overall is too short, having only 30 items when the Jump$tart Coalition itself recognizes 49 financial benchmarks, and has low internal subscale consistency, but adequate internal consistency and inter-correlation consistency. As for validity, only face and content validity is apparent. While the coalition’s benchmarks might be more useful for curriculum development in my course, I will also be using this survey, or at least some aspects of it.

 

d) Key Insights:

• Lucey laments that congruent validity is impossible to determine; older financial literacy instruments have not been evaluated for reliability or validity, so there is nothing to compare the Jump$tart survey to (p. 290). Obviously, this field is sorely underdeveloped compared to others, such as motivational and personality instruments.

• Relating survey items to practical life may improve predictive validity (p. 290). This reminds me of a discussion from the graduate course, DEP 5057: Developmental Psychology, at UCF in spring 2015 with Prof. Valerie Sims. This discussion involved the Heinz dilemma, where Sims spoke of research indicating that when high school students were presented with a more realistic dilemma about having casual sex, a majority of the students who displayed high levels of moral reasoning with the Heinz dilemma regressed with regard to the more realistic scenario (e.g., they advocated having casual sex without telling parents). Could a similar phenomenon exist with respect to personal finance? Perhaps if a survey instrument included realistic questions, it may be more predictive? One possible question could be whether you should go to Disney World because your friends want you to go with them, but you have to charge it to your credit card because you have no money in your checking account. This could be set up as a story, which might aid readers in rationalizing and justifying the bad financial decision. Realistic questions may have greater predictive validity for participants who engage in such rationalization in real life.

 

e) Further Reading:

Jump$tart Coalition (2000, April 9). Financial literacy declining among 12th graders, coalition urges states to include personal finance in curriculum standards. Retrieved March 9, 2002, from http://www.Jumpstart.org/upload/news.cfm?recordid=60.

 

NOTE: Relate to Mandell & Klein (2007): Including personal finance in curriculum standards might not work if students remain unmotivated! Suggesting that education is a panacea may not be accurate.

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a) Citation [PROJECT # 2, COMPANION PAPER, CITATION # 2]

Lindsey-Taliefero, D., Kelly, L., Brent, W., & Price, R. (2011). A review of Howard University’s financial literacy curriculum. American Journal of Business Education, 4(10), 73–84.

 

b) Abstract:

This article evaluates a financial literacy curriculum at the Howard University (HU) School of Business, by measuring the financial knowledge acquired after participating in a variety of programs. To evaluate the HU curriculum, the National Jump$tart Coalition (NJC) survey was administered to collect data on financial knowledge and demographic characteristics. Descriptive statistics and regression analysis were used to study the data. The results show that HU-Business students performance was comparable to Jump$tart’s national average for college students and Business/Economics students. HU Business students scored higher than the Jump$tart’s African American student sample. The regression analysis helped identity key factors that influence financial awareness for HU students including having checking account, electronic tax preparation, taking a course in personal finance or money management, GPA, and frequently balancing check book.

 

c) Relation to Capstone Project # 2, Companion Paper:

This article gives useful insights from the development of Howard University’s curriculum, based on the CreditSmart curriculum. In particular, the authors found that students with student loans performed 6.17% better on the Jump$tart tests, perhaps because of the required financial training prior to receiving the loan (p. 81). I believe this is an important point, because it shows that targeted financial education is efficacious, providing support for the conjectures of Mandell and Klein (2007). Why, then, are we not mandating education prior to applying for credit cards?

The authors also include a table with summaries of eight prior financial literacy studies in their literature review (p. 74). Among the papers I have read so far, this is depressingly rare. I may consider or use some of this information for my companion paper.

Important note: The Jump$tart survey was expanded in 2008 to include college students, at which time the high school version contained 31 items, and the college version contained the same 31 items plus 25 additional items for a total of 56 items. Articles from before 2008 do not account for this.

 

d) Key Insights:

• Overall, the authors’ literature review led them to the conclusion that American adults simply are not prepared to make financial decisions (pp. 74–75). This is a theme that appears again and again from reading the literature. While it can be demoralizing, it also shows us that a lot of “low-hanging fruit,” or easy gains relating to the financial literacy of the public, are yet to be picked.

• The authors statistical analyses led them to the conclusion that simply owning a checking account was correlated with an 18.9% increase in performance on the Jump$tart 56-item survey (p. 79). This is astounding at first glance. From anecdotal personal experience, I have noticed that many high school dropouts never attain checking accounts, or are barred from opening accounts due to accumulated debts relating to overdraft fees on past checking accounts. They are on the ChexSystems blacklist, the Early Warning Services blacklist, and may also have passed credit delinquencies, particularly relating to medical bills which are surprisingly easy to expunge, and yet they lack the knowledge, education, and even computer access that make such processes easier. It is difficult to dispute items on your Experience, Equifax, and TransUnion credit reports from your cell phone! While calling in is an option, many do not even know about the problem, nor how to request their free annual credit report, to begin with. We should not confuse correlation with causation here—individuals who have checking accounts are likely be financially advantaged in unrelated ways.

 

e) Further Reading:

McCormick, M. H. (2009). The effectiveness of youth financial education: A review of the literature. Retrieved from http://files.eric.ed.gov/fulltext/EJ859566.pdf

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a) Citation [PROJECT # 2, COMPANION PAPER, CITATION # 3]

Bosshardt, W., & Walstad, W. B. (2014). National standards for financial literacy: Rationale and content. Journal of Economic Education, 45(1), 63–70.

 

b) Abstract:

The National Standards for Financial Literacy describe the knowledge, understanding, and skills that are important for students to learn about personal finance. They are designed to guide teachers, school administrators, and other educators in developing curriculum and educational materials for teaching financial literacy. In this article, the authors explain the reasons for the development of the Standards by the Council for Economic Education and the work of economists, economic educators, and teachers to prepare them. They describe each of the six content standards and how they are supported by associated benchmarks at the fourth, eighth, and twelfth grades. The authors also discuss several valuable Standards’ features, including a focus on economic content and decision-making skills as the foundation for financial literacy.

 

c) Relation to Capstone Project # 2, Companion Paper:

This article presents proposed national standards for financial literacy, which could serve to either standardize or provide a common framework for K–12 financial literacy education throughout the United States. The standards include items such as incomes, savings, and credit. I particularly like the categories and their purposely timeless nature (pp. 66–67); the authors are keen to note that benchmarks such as “writing a check” are not included in their 144 benchmarks. It also seems intuitively logical to me that the benchmarks are cumulative and presented for the 4^th, 8^th, and 12^th grade levels, since the skills build on each other like any math skills, and since these are key ages where developmental or cultural shifts take place. I will surely consider using the standards and suggestions the authors have presented in guiding and justifying my course design choices.

 

d) Key Insights:

• The authors note that time and uncertainty are often too difficult for elementary students to understand (p. 66); thus, it makes pedagogical sense to focus on these topics in middle and high school rather than elementary school. Similarly in my course design, it is important I do not overwhelm beginners with concepts that require prerequisite knowledge, although developmental concerns will be negligible since my course is aimed at adults.

• I love that the standards include “human tendencies or factors” that are illogical (p. 68), such as being influenced by marketing tricks such as anchoring, tending to “stick with our gut” even when knowing of the first-instinct fallacy (Kruger, Wirtz, & Miller, 2005), and being unable to judge probabilities or time. While some sociologists may argue otherwise, humans are simply not rational maximizers! I can see why some financial figures such as Dave Ramsey will advise their followers to do things such as completely avoid credit cards and to pay the small debts first rather than the high-interest debts first (the “snowball” theory)—while mathematically suboptimal, these approaches have better results for people who are vulnerable to financial failure if they use credit cards or become discouraged by too great a number of debts.

 

Reference

Kruger, J., Wirtz, D., & Miller, D. T. (2005). Counterfactual thinking and the first instinct fallacy. Journal of Personality and Social Psychology, 88, 725–735.

 

e) Further Reading (citation copied from article—not APA format):

U.S. Department of the Treasury, Office of Financial Education. 2010. Financial education core competencies. Federal Register 75(165): 52596. Washington, DC: U.S. Department of the Treasury. http://www.gpo.gov/fdsys/pkg/FR-2010-08-26/pdf/2010-21305.pdf (accessed July 28, 2013). Continue reading Annotated bibliographies for financial literacy course →