More on financial literacy
April 11, 2008
Mike has a fair point that schools can't do everything. He might have added that it's hard to picture most high school teachers being able to confidently explain variable interest rates or balloon payments, or any students bothering to listen. But Liam reaches from that to imply that Bernanke is suggesting teaching financial literacy to 12 year olds--that wasn't what he said (he was talking about high school).
But more to the point, it's just wrong, and contradicts the Gadfly piece Liam refers to, to flatly dismiss the idea that financial literacy wouldn't have prevented the current financial crisis. It might very well have. If more people had basic financial knowledge, they would be far smarter about buying homes they could actually afford, about taking loans they could pay back, and about accepting terms that were not "predatory" or overly dependent on variable interest rates. How to help people get that education is the key policy problem. Mike is probably right (as is Liam) that it's not in high schools--so where, and how?