The hope is that the study's long-term results will help financial educators learn more about what causes people to spend, save, take on debt, rely on payday loans, or buy homes they cannot afford. "If we look at how these behaviors are formed, we have a better chance of intercepting them," says Joyce Serido, one of the study's primary researchers and an assistant professor at the University of Arizona.
Widespread financial-literacy education is not a new concept, first rising to prominence about 15 years ago. There are roughly 800 different types of financial-literacy curricula currently published in the U.S., says Marri. Institutions from the Federal Reserve to the Council for Economic Education to financial services companies offer guides on the best ways to teach young people about money, financial markets, and good saving habits.
The federal government alone spent $68 million on 15 financial-literacy programs in 2010, according to the Government Accountability Office. And the Jump$tart Coalition, a D.C.-based nonprofit that promotes financial education, has found that roughly 25 states now require some type of financial-literacy classes or similar exposure to graduate from high school.
The only problem with this myriad of options? They tend to teach financial literacy in a pretty didactic way by testing students on multiple-choice questions instead of asking them to really think through their financial values. "Just think of any one-semester course you took in high school. Do you remember it at all?" says Laura Levine, president and CEO of Jump$tart.
Add to this a flood of information and sales pitches coming out of the financial-services industry, and it's no wonder that Americans feel confused. A November 2013 study by the Consumer Financial Protection Bureau showed that the financial industry spends about $17 billion annually to market its products, whereas the federal government, nonprofits, schools, and corporations combined spend about $670 million on financial education. That comes out to about $54 per person per year spent on financial marketing versus a little more than $2 per person spent on financial education. It's hardly a fair battle.
The push among financial educators these days is to instead focus on the underlying behaviors that shape young people's financial decisions with the hope of eventually changing them. It is part of the broader field of behavioral economics, which posits that economists can only teach people to tweak their actions when they understand the psychology behind economic decisions.
That is the philosophical basis of the University of Arizona study that began as a research idea in 2006 and published its first few waves of its findings in 2009, 2010, and 2011. Funded by the National Foundation for Financial Education, the University of Arizona, and the Citi Foundation, the research started out following roughly 2,000 students at ages 17 or 18 as they entered college and began to make their own independent money decisions.