Efforts to improve financial literacy are critical. But how do we know if these efforts work? How can we gauge their effectiveness?
National statistics are not very good to begin with and don’t seem to be improving, but a campaign by CFA Society Pittsburgh has reached a statistically significant number of participants and the results show that it has been highly effective.
The society’s high school outreach has impacted over 147 high schools over the past three years, and continues to expand. These efforts, bottom up by design, are focused on the classroom and seek to achieve two objectives:
- Get students excited about making smart money choices.
- Help teachers accomplish Goal 1.
In pursuit of these objectives, CFA Society Pittsburgh has partnered in an annual, ACT 48-accredited, continuing education program for personal finance teachers for the last three years. Many of our attendees teach math, English, consumer sciences, history, and business, BUT all have a passion for financial literacy and work hard to incorporate the subject into their respective classrooms.
Very few participants exclusively teach personal finance, but we have noticed a trend. One teacher who has attended every year, raised his hand at the conclusion of this year’s program and asked a question of the audience, “How many of you have an approved personal finance course?” At least a dozen hands shot up, and many more participants said they were close to launching one. Why did he ask? Because someone made the same query in the program’s first year. Back then, only one hand was raised. It was a proud moment to experience.
Because time and school budgets are both limited, we created a curriculum and “classroom assignment portal” based on The Missing Semester, an award-winning financial guide that was recognized as 2013 Book of the Year by the Institute for Financial Literacy. The classroom assignment portal, in which participating teachers share their “best assignment,” has helped to meaningfully establish CFA Society Pittsburgh across the region. Teachers who three years ago were asking, “What is the CFA designation?” now casually reference the designation to their students. In addition, we provide ancillary teaching materials, including Power Point slides on basic money choices and the Roth IRA, and a committee of volunteers is available to speak at area high schools about critical financial knowledge.
Measuring the Impact
To determine whether our high school outreach efforts are having a positive impact, we have conducted an academic study with a team from Penn State Behrend. The study, which is entering its third year this fall, is designed to measure the efficacy of our campaign in four critical areas of financial literacy:
- Subjective financial knowledge
- Financial behavior
- Objective financial knowledge
We conduct both pre- and post-program tests to assess changes in these four areas. Initially, the results of the pre-survey taken by students before beginning the financial education program are analyzed using t-tests. We found, for example, students with higher grade-point averages (GPAs) are more likely to display better financial behavior and objective financial knowledge than students with lower GPAs.
Subsequently, logistic regressions test the relationship of subjective financial knowledge, financial behavior, and objective financial knowledge. Students with higher GPAs, who are more likely to exhibit better financial behavior and objective financial knowledge, demonstrate lower subjective financial knowledge. A sample of other pre-survey results include:
- Students who favor English are more likely to show lower objective financial knowledge.
- Visual learners are more likely to show lower subjective financial knowledge.
- Overall, good financial behavior implies better financial knowledge, both objective and subjective, and vice versa.
- Conversely, subjective financial knowledge exhibits no statistically significant effect on objective financial knowledge, indicating perceived financial knowledge does not equate to actual financial knowledge.
We then conducted a t-test on participants analyzing the four major topic areas and how results differed between the pre- and post-test survey. These questions covered such topics as debt management, numeracy, exponential growth bias, and retirement understanding, among others.
Students experienced a statistically significant increase in all four topic areas.
Financial behavior improved at the 5% level, while subjective financial knowledge, objective financial knowledge, and financial self-esteem improved at the 1% level. Students exhibited a gain in each of these categories after completing the financial literacy education.
The area of greatest improvement? Student awareness of the Roth IRA — an interesting conclusion for society, the industry, and wealth management professionals.
The statistically significant gains in the four areas we measured demonstrate that our financial literacy program increases students’ chances of financial success. Importantly, every high school teacher participating in the pre- and post-survey receives a one-page financial literacy progress report identifying their strongest and weakest areas.
Schools outside of our region are participating in this study, and we welcome partners in this important effort.
Stay Tuned: This April we concluded our fourth annual Collegiate Personal Financial Plan Competition. Over 250 students from more than a dozen colleges/universities participated this year.
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer
Image credit: © Getty Images/ MHJ
Gene Natali, Jr., CFA, is a senior vice president at C.S. McKee, L.P., a Pittsburgh-based institutional investment firm. He holds the Chartered Financial Analyst designation and serves on the board of directors for the CFA Society of Pittsburgh. He holds an MBA with a concentration in finance from Carnegie Mellon University’s Tepper School of Business and a bachelor’s degree in economics from Allegheny College. He also serves as a part-time lecturer for the University of Pittsburgh’s College of Business Administration and co-authored an award-winning financial guide, The Missing Semester.
Greg Filbeck, CFA, FRM, CAIA, CIPM, PRM, is the Samuel P. Black III Professor of Finance and Risk Management and Director of the Black School of Business at Penn State Behrend, The Behrend College. He has authored or edited 12 books and published more than 95 academic articles. Professor Filbeck has conducted training for professional designations for the last two decades. He served as president of the CFA Society Pittsburgh from 2014 to 2018 and formerly served as president of the Toledo Society for Financial Analysts.
Jason Pettner works at C.S. McKee as a Portfolio Accountant. He is a CFA Level I candidate, as well as a candidate for CFP Certification. He recently graduated from Penn State Behrend with a degree in finance. As a student, he served as president and chief investment strategist of the Intrieri Family Student Managed Fund. For the past three years, Pettner has been a student member of the CFA Society Pittsburgh, where he serves on the financial literacy committee.