EVALUATING MANDATED PERSONAL FINANCE EDUCATION IN HIGH SCHOOLS

180 Pages·2008·2.66 MB·English

EVALUATING MANDATED PERSONAL FINANCE
EDUCATION IN HIGH SCHOOLS

DISSERTATION

Presented in Partial Fulfillment of the Requirements for

the Degree Doctor of Philosophy in the Graduate

School of The Ohio State University

by

Tzu-Chin Martina Peng, B.A., M.B.A.

* * * * *

The Ohio State University

2008

Dissertation Committee:
Aproved by
Professor Jonathan J. Fox, Adviser

Professor Catherine P. Montalto _______________________________
Adviser
Professor Cäzilia Loibl Graduate Program in Family
Resource Management
ABSTRACT

The purpose of this study is to evaluate the effectiveness of personal finance
education mandates. Personal finance mandates in high school are classified into three
categories based on curriculum requirements: (1) standard mandates provide guidelines
for instruction; (2) course mandates require students to take a personal finance related
course before graduation; and (3) test mandates require students to take a financial
literacy test before graduation.
To evaluate the impact of state level education mandates data from the 1997 to
2006 Jump$tart Financial Literacy Surveys was analyzed. The prior research using the
Jump$tart data has shown that imposing a general mandate may have little impact on
student financial literacy. In this study, mandating educational standards show partial
positive impact on student financial knowledge test outcomes. Mandates that require
taking a specific personal finance course upon completion of high school have a
significant and positive impact on student financial literacy. Mandates that require testing
of personal finance knowledge before graduating from high school were found to have a
negative impact on student financial knowledge.
The key findings of this study have important implications for policymakers,
educators and researchers who are promoting the implementation of personal finance
education.
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As more states are implementing personal finance education in current curriculum
in recent years, the mandated educational standards start to show a positive relationship
with student financial literacy. Development and implementation of a national
educational standard for personal finance education should be guided under the
leadership of federal government.
Empirical results indicate that a positive relationship between a course mandate
and student financial literacy enhances with the maturity of course mandates. More
efforts on promoting mandatory personal finance course are encouraged. Policymakers
should reevaluate the policy on mandating a state-wide personal finance test in high
schools since the mandatory test appears to have a negative impact on student knowledge
of personal finance. Mandating a specific personal finance course better enhances student
personal finance knowledge than mandating tests. Educators are encouraged to work
closely with government agencies to highlight the most efficient methods of increasing
financial literacy in high schools. Researchers should further investigate the relationship
between mandated personal finance education and student financial behavior.

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Dedicated to my family

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ACKNOWLEDGMENTS

Mike, my husband: thank you for always being the greatest supporter in the
world. With your patience and love, I know I am never lonely down the road of life.
Anna, my daughter, thanks for being a lovely baby. I cherish the time we took
classes and did homework together during the pregnancy. You are the best
encouragement after a tiring day of school. You made me realize how wonderful
parenting is!
Bob and Lucia, my parents: I am so grateful to be your daughter. Thank you for
the endless care and love for us. Not until becoming a parent myself did I realize how
much sacrifice you have made for us, without asking anything in return. You have given
me so much in my life and I will pass it down to the next generation. Oscar and Jean, my
parents-in-law: it is such a blessing to have you in our life. Thank you for your tireless
support during our most difficult time so that I can finish my PhD study. Nick, my
dearest brother: thank you for always being there as the support for our family.
The Fox family: Jonathan, the best advisor, mentor, and friend: my gratefulness
to you for your support and encouragement is beyond description. Thank you for
bestowing so many valuable lessons upon me through your positive attitude toward life,
your receptiveness for everyone around you, and your sense of humor which shed so
much light for those fortunate enough to know you. I would like to extend especially
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heartfelt thanks for being so understanding, helpful, and patient throughout my long-
distanced study. I could never accomplish this dissertation without your guidance and
continual support. Suzanne, you deserve so much thanks and praise for your insightful
advice and never-ending support on my research work. I’ve enjoyed writing papers with
you too. The whole process is never stressful, rather it is quite enjoyable. And baby
Sophie, you have been such a delight during my dissertation writing process. I cannot tell
you how many times when I got frustrated and tired, especially in the later stages; your
cute pictures cheered me up. Your beautiful, big eyes revitalized me as they cried out,
"You can do it". Thank you for simply for being such a little angel! Thank you all Foxes,
for your love and friendship!
My dissertation committee, Dr. Montalto: I am grateful for your support and
guidance for my dissertation. I also enjoyed your class very much, which was one of the
best lectures during my study at OSU. Thank you for leading us to the rewarding world
of research and for being so patient reading our papers over and over. Dr. Loibl: thank
you for your thoughtful suggestions for my dissertation. You have always provided
useful information for graduate students and spent time with us on research ideas and
methods.
Dr. Hanna: you exposed me to a wonderful world of personal finance in the first
year of my PhD. Despite the fact that working as your teaching assistant was one of the
most challenging times of my life, it was one of great discovery too. I look back with
fondness and sincerely appreciate the opportunity to learn so much from you. I truly
appreciate all the time you sacrificed to share research ideas and provide great advice. Dr.
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Stafford: thank you for always being there to listen and discuss with me about my
research.
Dr. Mandell: thank you for your generosity for sharing this wonderful dataset
with me so that this dissertation and one of my dreams could be realized.
Colleagues and friends at the Ohio State University, Vibha: you have always been
so patient to discuss research ideas and help me with my studies in any way you can. I
enjoyed all of our time together; whether taking classes together, sitting in seminars
together, or simply sharing thoughts about our careers and life. I am so thankful to have
such a great friend like you. Meichi, Dave, and William: thank you for helping me with
all the paper work during the long process to finish the degree. Michelle, Carol and the
Shang family: I am thankful for your taking such good care of me and my family during
my study in Ohio. You have made our life in Ohio a great experience that we will never
forget.
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VITA

April, 1976 ....................................................Born - Taipei, Taiwan

1998................................................................B.A., English, Soochow University

2000 - 2002 ....................................................Master of Business Administration
State University of New York at Buffalo

2003 - 2007 ...................................................Graduate Teaching and Research Associate,
Department of Consumer Sciences, The
Ohio State University

PUBLICATIONS

1) Peng, T. M., Bartholomae, S., Fox, J. J., & Cravener, G. (2007). The impact of
personal finance education delivered in high school and college courses. Journal of
Family and Economic Issues, 28(2), 265-284.

2) Chen, C., Peng, T. M., Evans, D., and Hanna, S. “Putting your money where your
mouth is. Do households optimize their investment portfolios based on their subjective
risk tolerance?” Consumer Interests annual, 52.

3) Peng, T. M. and Lee, J. (Nov 2005) “Health status and pension income” Poster session,
th
The Gerontological Society of America 58 conference proceedings.

4) Peng, T. M., Bartholomae, S., and Cravener, G. (Feb 2006). “High school or college?
The best time to take personal finance courses” Eastern Family Economics Resource
Management Association conference proceedings.

FIELDS OF STUDY

Major Field: Consumer Science
Minor Field: Statistics & Geographic Information System

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TABLE OF CONTENTS

Page
Abstract ............................................................................................................................. ii

Dedication ........................................................................................................................ iv

Acknowledgments............................................................................................................. v

Vita ................................................................................................................................. viii

List of Tables .................................................................................................................. xii

List of Figures ................................................................................................................ xiv

Chapters:

1. Introduction . 1

1.1 Background . 1
1.2 Statement of the Problem .................................................................... 2
1.3 Purpose of the Study ........................................................................... 4
1.4 Significance of the Study .................................................................... 4
1.5 Outline of the Study ............................................................................ 5

2. Policy .................................................................................................................... 7

2.1 National Eforts . 7
2.2 The Financial Literacy and Education Improvement Act .................. 9
2.3 Financial Education in High Schools ................................................ 11
2.4 State Mandates . 13
2.5 Summary . 19

3. Review of Literature ........................................................................................... 21

3.1 Evaluating Personal Finance Education Abstract ............................. 21
3.1.1 Financial Literacy among Young Americans .......................... 22
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