Things got pretty interesting on Freakonomics author Stephen J. Dubner’s podcast this morning. Dubner pitted two finance experts against one another to try to answer this question:
Is more financial education in the U.S. the key to healing our personal finance woes?
In the education proponents’ corner was Annamaria Lusardi, a George Washington University economist, armed with a decade’s worth of knowledge on the subject.
“I think people are very smart and they try to do their best, but I think it’s very expensive to acquire financial education,” Lusardi said. “A lot of people tell me financial education is very difficult … but driving is very difficult and look what we’ve done: we’ve put 15-year-olds on the road. Imagine what would happen if we put people on the road without giving them driving lessons.”
Seems like a pretty firm assessment, and one that’s been backed up a host of finance experts, including Chairman of the Federal Reserve Ben Bernanke.
But Loyola Law School professor Lauren Willis was quick to blast both Bernanke and Lusardi’s vision of a new high school finance curriculum.
It just wouldn’t work, she contended.
“It’s sort of like saying, well we should start teaching everybody to be their own doctor, teaching everyone to be their own mechanic,” she said. “Not only is it inefficient, but it has this sort of culture of blaming the consumer. You know, you’re the one who didn’t figure this all out.”
Shooting down the idea that schools should start educating students on financial literacy isn’t one of the more popular stances to take on the issue, but Willis stood firm by her position.
“I’ve gotten hate mail from people about this,” she admitted. “But then I also get folks, particularly people do work in the financial industry and give financial advice…and they tell me, you know, you’re exactly right but you cant use my name or tell anyone I said this because my firm’s official position it that we support financial education.” (See why the mutual funds industry is one huge scam.)
Her answer to the financial crisis? Introduce a new breed of financial advisors that aren’t so busy peddling financial products to consumers as sales reps that they fail in actually counseling them.
Their advice wouldn’t be free, Willis said, but it would be invaluable to consumers trying to navigate very complex financial decisions.
To listen to the whole debate, check out the podcast here.