In The News
Most Lawmakers Don’t Have Economic Education
The Wall Street Journal
As Congress works on one of the most important pieces of economic legislation in a generation, a Washington research group has pointed out that more than 8 in 10 members of Congress don’t have a formal educational background in the business, economics, or finance fields.
The research by the Center for Economic and Entrepreneurial Literacy, which aims to educate the general public about finance issues, showed that about 14% have degrees in economics-related fields and just 6.7% specifically have an economics degree. More than 30% of members have degrees in politics and government, while 18% majored in humanities.
The New York Times
A recent survey, done by the Center for Economic and Entrepreneurial Literacy, a Washington-based research center, asked 1,000 people in April to choose the four most relevant factors in obtaining a mortgage. Nearly 70 percent did not identify their credit score, which chiefly determines the borrower’s loan eligibility and interest rate.
It is little wonder, then, that borrowers often cannot navigate the more complex world of closing costs, which involve paying an array of fees to the loan’s originator, appraisers and those who vouch for the legitimacy of the title, among others. “You’ll absolutely find that if people don’t have the economic education background they need, they’ll end up paying more for a mortgage,” said Tim Miller, a spokesman for the Center for Economic and Entrepreneurial Literacy.
Americans’ lack of financial sophistication is a cause, not just a symptom, of the credit crunch, said James Bowers, managing director of the Center for Economic and Entrepreneurial Literacy, a nonprofit group in Washington. It may be a reason people are willing to take out loans for homes they can’t afford or add to credit card debt at adjustable rates.
“When we go to a mechanic, we trust them to fix our problems,” he said. “But right now, the mechanics on Wall Street can’t get their own cars to start.”
James Bowers: Financial illiteracy plagues America
Why are Americans making such bad financial decisions? Many of us just don’t know any better. We may be home to the world’s largest economy, and a public-school system that spends over $500 billion every year, but only three states mandate personal-finance classes in schools. The other 47 presumably expect students to learn from their parents, three-quarters of whom admit they are unprepared to teach their kids about personal finance.
John F. Kennedy called on Americans to “think of education as the means of developing our greatest abilities.” We must now focus on developing our ability to make smart financial decisions through education, because a nation of economic illiterates cannot prosper. We must not repeat the mistakes that got us into this credit mess, and we must be vigilant in our efforts to increase financial education for all Americans.
Business Ignorance On The Rise
Jamestown Post Journal
Because of this trend of economic ignorance, the Center for Economic and Entrepreneurial Literacy has implemented a number of programs, all designed at educating the public, explained Tim Miller, a spokesperson for the center.
Too many young adults are starting careers without sufficient knowledge of key financial issues,” Miller said. ”We focus on economic education by presenting the facts to the public in a way that is easy to grasp and implement in their lives.
Cape Cod Times
“Americans are astonishingly illiterate when it comes to very basic facts about personal finances,” said Tim Miller, spokesman for the Center for Economic and Entrepreneurial Literacy, an educational project of the Employment Policies Institute in Washington, D.C. “Financial illiteracy has been one of the major causes of the subprime mortgage crisis.”