building decision-making skill for personal finance.ppt
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2009 OATFACS Conference2009 OATFACS Conference
Douglas HaskellAssociate Professor of Economics
Director of Professional DevelopmentEconomics Center Education & Research
University of Cincinnati
513-556-2951
2009 OATFACS Conference2009 OATFACS Conference
Building
Decision-Making Skills
for
Personal Finance
2009 OATFACS Conference2009 OATFACS Conference
If you would like the notes
from this presentation, with links,
email:
Subject Line: OATFACS Notes
2009 OATFACS Conference2009 OATFACS Conference
A warm-up activity…
You are the Valedictorian of your senior class. A movie company
offers you $1,500 to mention the name of their new movie in your graduation speech.
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Will you take the money?
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How many times in your life as a producer or as a consumer do you
face ethical dilemmas about earning income or spending?
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What role does ethics play in economic-consumer-financial
education?
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So …
Who needs economics, consumer
and financial education?
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July 29, 2009…
U.S. unemployment rate in June: - 9.5%
Real GDP growth (Q1 2009): -5.5%
Fed Funds Rate range: 0 to .25%
Continuing sclerotic credit markets
Continuing low housing and resource values
Consumer confidence near an all-time low.
CPI in June 2009: +0.7% - Personal income: -1.2%
Not to mention health care…so I won’t.
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Good news: stock prices are up!
Why?
Stock prices are based on future
expectations.
Things must not be that bad (?)
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Understanding the U.S. economy and planning your financial future in 2009:
What is a TARP? (temporary asset relief program)
What is a credit crunch?What is a fiscal stimulus?What is the fed funds rate?What is inflation? Deflation?What is a “toxic asset”?
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Uncertainty about the future can have unintended negative consequences.
Even those with jobs, income and positive futures have stopped spending. Less spending results in fewer jobs and income.
Dependence on fragile credit markets results in more uncertainty
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How do we help students (anyone) understand and cope with these
economic and financial conditions in
an ever-changing world economy?
Could more economic and financial education have prevented
these problems?
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One of the most important concepts in economics for today’s students…
Derived demand
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Derived demand
The demand for a productive resource, such as labor, is derived from the demand for the good or service the resource produces.
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How did the Ohio legislature respond to the very early signs that there were problems in
financial markets and that Ohio households
had potential problems?
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Ohio Senate Bill 311
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• Ohio Senate Bill 311…
– required for HS graduates in grade 9 in 2010– embed the instruction in a required course– standards in economics and personal finance– using available business and community
resources– using resources from the Ohio Centers for
Economic Education
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What does SB 311 really require?
What is the required content?
Who teaches it?
When is it taught?
How is it assessed?
Who is making sure it gets done?
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What does it look like in a
high school or school district
implementation plan?
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What a good question!
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High School Implementation Options …
- Semester of economic principles
- Semester of personal finance
- Integrated economics and personal finance
- Integrated economics/personal finance/gov’t
- Family and consumer sciences
- Business and entrepreneurship
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Personal Finance/Economics:
- Thinking and decision-making skills
- Basic economic principles
- Personal financial decisions
- Economic systems
- Business and careers
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Integrated Economics and Personal Finance
Most of the basic economics content can be taught within the context of personal financial decisions.
Why not teach about he supply and demand for labor instead of the supply an demand for widgets.
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What is the best “tool” for teaching
economic thinking, decision-making
and problem solving?
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The
“Handy Dandy Guide”
to Economic Thinking
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The “Handy Dandy” Guide to Economic Thinking
– People choose
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The “Handy Dandy” Guide to Economic Thinking
– People choose– All choices have costs
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The “Handy Dandy” Guide to Economic Thinking
– People choose– All choices have costs– People respond to incentives
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The “Handy Dandy” Guide to Economic Thinking
– People choose– All choices have costs– People respond to incentives– People create systems that allocate costs
and incentives (benefits)
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The “Handy Dandy” Guide to Economic Thinking
– People choose– All choices have costs (TANSTAAFL)– People respond to incentives– People create systems to allocate costs
and incentives (benefits)– Only future costs really matter
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The “Handy Dandy” Guide to Economic Thinking
– People choose– All choices have costs– People respond to incentives– People create systems to allocate costs
and incentives (benefits)– Only future costs matter– Free trade creates wealth
• http://www.youtube.com/watch?v=VVp8UGjECt4
The key problems facing consumers…
• Current income
• Surplus income
• Deficit income
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Teaching financial topics with
economic reasoning…
“You are the Financial Advisor”(CEE, Learning, Earning and Investing, Grades 9-12)
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You are a financial advisor. Clients come to you to ask for your recommendation about what to do with their surplus income (savings).
You take time to clarify the criteria they can use to make their investment choices.
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Liquidity (transaction demand)
Growth potential (principal/interest)
Tax liabilities
Potential for loss (risk tolerance)
Your personal temperament
What are your options?
Passbook savings accountCertificates of depositGrowth stocksIncome stocksBalanced mutual fundGoldReal estate
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Around the room are posted signs of several investment options.
I will read a brief description of your client.
Stand by the sign of the investment option you would recommend.
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Discussion topics:
Personal financial goals Trade-offs Personal temperament Risk tolerance The value of good information Trust
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The best single resource for classroom instructional activities…
The Virtual Economics CD RomCouncil for Economic Education (NCEE)80 publicationsOver 1200 grade K-12 lessonsLinks to hundreds of online lessonsCorrelated to the Ohio Academic Content
Standards• www.ncee.net
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Raise your hand if you would
like a free copy of the
“Virtual Economics” CD Rom
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EconEdLink
www.econedlink.orgProduced by the Council for Economic Education
100s of lessons developed by educators
Includes “Focus on Economic Data” lessons
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Federal Reserve Bank Resources
- data sources
- instructional activities
- research
- classroom materials
http://www.federalreserveeducation.org
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Jump$tart Coalition for Personal
Financial Literacy
www.jumpstart.org
www.ohjumpstart.org
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Teaching about risk and insurance?
Go directly to the Ohio Insurance
Institute. They have everything you need to teach about property-
casualty insurance.
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What can your Economics Center
do for you?
www.ocee.org
Defining a Problem or Opportunity
Describe a problem or opportunity.
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Restate the problem or opportunity in five different ways.
1.
2.
3.
4.
5.
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• Restate the problem as a metaphor (a figure of speech in which two different universes of thought are linked by some point of similarity, ie. liquid assets, barking an order) or a simile (a figure of speech in which the subject is compared to another subject. Frequently, similes are marked by use of the words like or as or so.
•
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The Decision Making Process
– Alternatives– Criteria – benefits and costs– Basis for the assessment of alternatives– Measurement / Judgment– Analysis - comparison– Decision
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Clarify the alternatives
Eliminate any that are not possible
Clarify the criteria
Compare with similar criteria
Weight the criteria
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2009 OATFACS Conference2009 OATFACS Conference
Questions?
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Remember…
If you would like the notes
from this presentation, with links,
email:
Subject Line: OATFACS Notes
2009 OATFACS Conference2009 OATFACS Conference