"Teaching at an inner-city school, with high crime, violence, and poverty demands that we educators do everything within our means to educate students on the importance of managing limited finances. This will hopefully encourage parents to be mindful of it also. This is a topic that should be taught as early as possible in order to curtail the mindset of fast money earned on the streets and gambling being the only way to improve one's financial circumstances in life."
--Chicago Teacher-Librarian (survey response)
This paper describes how a coalition of partners identified and implemented a financial literacy program for Chicago public elementary school students. It establishes a wider context within the research literature regarding how children learn principles and concepts of economics and personal finance. It advances our understanding of how financial education may be successful with younger age groups in large urban environments, and it contributes to our understanding of how to measure children's financial and economic understanding.
Review of Research
There are few studies about teaching basic economic and financial concepts to children, possibly due to the difficulties of measuring economic understanding at young ages. Multiple-choice test questions require that children have a certain level of reading ability. Interviews of young children take time to administer and are difficult to standardize. As a result, there are no nationally normed, readily available knowledge tests or attitude measures to assess a child's knowledge of personal finance and economics.
However, research going back as far as 1969 suggests that young children can learn economics. In 1963, Lawrence Senesh, a pioneer in economic education, developed the instructional materials Our Working World: Families at Work for teaching economics at the elementary level (Senesh 1963). Larkins and Shaver's (1969) study used the Our Working World series to demonstrate that first-grade students who studied economics consistently performed better on economics tests than those students who did not study economics. Kourilsky (1977) found that children who participated in the Kinder Economy program significantly outperformed students in control groups. Laney's (1989) research used the Mini-Society program and found that young students can learn economic concepts when exposed to carefully designed instruction. He also found that students better retained economic knowledge when they were exposed to real-life examples in the classroom rather than examples heavily dependent on vicarious experiences. Morgan (1991) used a yes or no response test to measure the effectiveness of the video program Econ and Me. A sample of 300 students taught in the classroom by teachers trained to use the program demonstrated a statistically significant gain in economic learning from pre-test to post-test.
Sosin, Dick, and Reiser (1997) conducted a study involving control and experimental groups in grades three through six. Teachers in the experimental groups received economics training and used curriculum materials developed primarily by the Council for Economic Education. Teachers in the control group did not receive the training or curriculum materials. Students in both groups were pre- and post-tested using a standardized test of economic knowledge. In analyzing the results, the research team concluded that students in the experimental group learned significantly more economics than students in the control group. The variable that most significantly explained the difference in learning between the groups was their instruction in economic concepts.
Schug and Hagedorn (2005) studied 300 second- and third-grade students who were taught financial content by teachers trained to use the Money Savvy Kids curriculum. Analysis of the pre- and post-test results for these students showed they had a statistically significant gain in content knowledge and change in attitudes.
Suiter (2006) found that middle-school students taught personal finance and economics content in their mathematics classes performed as well on a mathematics test and better on economics tests than their counterparts not taught economics and personal finance in their mathematics classes.
Harter and Harter (2007) conducted a study to measure the effectiveness of the Financial Fitness for Life (FFFL) curriculum published by the Council for Economic Education. The study focused on the use of FFFL in elementary, middle, and high schools in low- to moderate-income areas in eastern Kentucky. Teachers in the experimental group were trained to use FFFL in their classrooms. Teachers in the control group were not trained and did not use the materials. Students in both groups were given pre- and post-tests carefully designed to match the program's content. Based on pre- and post-test results for the over 300 elementary students in the experimental group and over 600 elementary students in the control group, the study concluded that students in the experimental group showed a statistically significant increase in financial knowledge.
Finally, two important reviews of research provide a good summary of what we know regarding children's economic and financial...