Economics not just for adults

By Deborah Adamson
Advertiser Staff Writer

At the Economic and Financial Literacy Conference, Joy Hoffman, left, of the Federal Reserve Bank of San Francisco, and Kelly Walsh, of the Bank of Hawaii, discuss ways to increase people's understanding of money basics. Richard Ambo • The Honolulu Advertiser

"I never had the class so quiet," said the Moanalua Middle School teacher. "You could hear a pin drop."

What captivated them was the revelation that if they merely made the minimum monthly payment on what they owed, they'd end up paying a small fortune in interest costs.

"I told them why credit card companies encourage you to be a slow 'payer-backer'," Shaffer said.

As a social studies teacher, she has taken it upon herself to teach financial lessons to the kids. Shaffer is championing her cause at her school and encourages other teachers to follow suit.

But "I feel that I'm a fledgling in teaching economics," she said.

That's why she attended the Economic and Financial Literacy Conference yesterday along with 200 other participants. Co-sponsored by Sen. Daniel Akaka and the Hawai'i Council on Economic Education, the conference at the Japanese Cultural Center highlighted the importance of financial know-how and explored innovative ways to teach children about economics.

"Some of the financial troubles faced by people in Hawai'i and across the country today could have been mitigated if they had received pragmatic, standards-based education in economics and personal finance from a young age, when individuals are forming the habits they may use throughout their lives," said Akaka.

Financial missteps early in life — such as piling up thousands of dollars in credit card debt — have repercussions on the quality of lifestyle later on. It could make the difference between settling into a comfortable retirement, with enough money for traveling, and a bare-bones existence supported only by Social Security benefits.

"Our children can be better prepared in school to face life's challenges," the senator said.

Last year, 29 percent of high school seniors were enrolled in an economics course, down from 47 percent in 1999, said Sumner LaCroix, head of the economics department at the University of Hawai'i. Fewer trained teachers and fewer high schools offering economics courses, along with inadequate resources, were the reasons.

LaCroix said states that require economics to be taught in high schools have higher per-capita savings rates, with individuals tending to save an extra year of income. In Hawai'i schools, economics is an elective.

Teaching economics to children is critical. The number of bankruptcies among people between ages 18 and 25 is rising, said Kristin Smith, director of the Office of Financial Education at the U.S. Department of Treasury.

In a study by the Hawai'i Council on Economic Education that tested the financial knowledge of more than 400 adults, two-thirds correctly answered just 13 out of 20 questions. About 27 percent got at least half the answers wrong. Questions ranged from rent control to money basics.

Such a gap in education is troubling because personal finance and economics infuse practically every aspect of a person's life, La Croix said. Better education leads to understanding how the money supply affects inflation rates and gives individuals the skills to compare mortgages and how to budget, save and invest.

Part of the problem is that people think of economics as "what they do at MIT and not what you do in your day-to-day lives," said Robert Duvall, president of the National Council on Economic Education.

But the practical applications are plain to see. In one case, after showing Mainland students they'd have only $50 a month left for clothes after paying basic expenses on a $24,000-a-year salary, the teens were encouraged to continue school so they'd get better-paying jobs, said Susan Sclafani, counselor to the U.S. secretary of education.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.