The development and promotion of financial literacy standards: Establishing standards in the United States

Abstract

As financial markets become more complex and as financial decision-making shifts to individuals, individuals need to have the appropriate knowledge and competencies to make informed financial decisions. In reaction to this need, schools, districts and departments of education have begun the process of increasing financial education in their curricula. The first step in this process is the development and implementation of standards. Because standards in the United States are developed primarily at the state or local level, any uniformity of content across state standards or curricula is often generated by the advocacy of groups interested in the promotion of particular subject. Various groups compete by convincing schools, districts and states to adopt their philosophies. While most groups have altruistic intentions, the increased prominence of financial literacy in the primary and secondary schools has also increased the participation in curriculum development of for-profit financial firms. The development of financial literacy standards in the U.S. provides an example of the standards-setting process. The process provides a forum for debate about what is important to teach children about financial behaviour: Is it preferable to emphasize the mastery of economic and financial content as a background in making decisions or to focus on being able to complete certain financial tasks? Is the use of heuristics to guide complex economic or financial decisions more effective in changing financial behaviour than teaching content or skills? Or is a combination of various methods desirable? This chapter details the development of financial literacy standards in the context of a decentralized standards-setting process.