As consumer prices continue to rise, experts now warn of a looming recesssion brought about by pandemic manufacturing slowdowns and supply-chain shortages. Economists explain it as a classic case of demand outpacing availability –– with scarcity making things more costly. Unfortunately, the painful solution now being launched will raise borrowing costs rates so that people spend less. While these measures may or may not improve the overall economomy, the combined effects of inflation and rising interest rates will exact a double blow to people struggling to make ends meet. In such an atmosphere it becomes critical to help people manage their own finances and to prevent the broader economy from overheating. This is where consumer education and financial literacy can help as part of a largermove toward a “learning society.”
For some time now, economists have been promoting financial education in public schools and urging people to become more resourceful. Time Magazine reported polls showing “99 percent of adults in agreement that personal finance should be taught in high school.”[i] The Federal Reserve argued that “financial literacy and consumer education, coupled with strong consumer protections, make the financial marketplace ‘effective and efficient’ and assists consumers in making better choices.”[ii] Many colleges and universities have started making financial literacy courses graduation requirements. And for some it has worked, as many Americans “put their own budgets under the microscope –– akin to what financial analysts routinely do when the scrutinize companies.”[iii]
Continue reading “The Learning Society”
When you look at the national statistics on college graduation rates, there are two big trends that stand out right away. The first is that there are a whole lot of students who make it to college — who show up on campus and enroll in classes — but never get their degrees. More than 40 percent of American students who start at four-year colleges haven’t earned a degree after six years. If you include community-college students in the tabulation, the dropout rate is more than half, worse than any other country except Hungary.
The second trend is that whether a student graduates or not seems to depend today almost entirely on just one factor — how much money his or her parents make. To put it in blunt terms: Rich kids graduate; poor and working-class kids don’t. Or to put it more statistically: About a quarter of college freshmen born into the bottom half of the income distribution will manage to collect a bachelor’s degree by age 24, while almost 90 percent of freshmen born into families in the top income quartile will go on to finish their degree.
When you read about those gaps, you might assume that they mostly have to do with ability. Rich kids do better on the SAT, so of course they do better in college. But ability turns out to be a relatively minor factor behind this divide. If you compare college students with the same standardized-test scores who come from different family backgrounds, you find that their educational outcomes reflect their parents’ income, not their test scores. Take students like Vanessa Brewer, who do moderately well on standardized tests — scoring between 1,000 and 1,200 out of 1,600 on the SAT. If those students come from families in the top-income quartile, they have a 2 in 3 chance of graduating with a four-year degree. If they come from families in the bottom quartile, they have just a 1 in 6 chance of making it to graduation.
The good news for Vanessa is that she had improved her odds by enrolling in a highly selective college. Many low-income students “undermatch,” meaning that they don’t attend — or even apply to — the most selective college that would accept them. It may seem counterintuitive, but the more selective the college you choose, the higher your likelihood of graduating. But even among the highly educated students of U.T., parental income and education play a huge role in determining who will graduate on time. An internal U.T. report published in 2012 showed that only 39 percent of first-generation students (meaning students whose parents weren’t college graduates) graduated in four years, compared with 60 percent whose parents both graduated from college. So Vanessa was caught in something of a paradox. According to her academic record, she had all the ability she needed to succeed at an elite college; according to the demographic statistics, she was at serious risk of failing. Continue reading “Who graduates and who doesn’t”
No less an entity than the US State Department today announced a new initiative to approach world economic growth from the perspective of gender.
As the State Department press release reads: “Growth – the most pressing issue on the agenda of every economic policy-maker in the world today. How do we get it? How do we sustain it? How do we make it inclusive? How do we ensure it generates jobs? Infrastructure investment, eliminating trade barriers, investment in education and research, fostering entrepreneurship, better tax policy – there may be no silver bullet, but we should explore all possible means of raising growth and perhaps the solution is right in front of us. Recent studies suggest that if OECD countries saw full convergence of men and women in our labor force, these countries would benefit from an overall increase of 12% in GDP over the next 20 years. Now the question is: how do we get there?
“Gender and its relevance to macroeconomic policy is a relatively new field. And while work has been done on the data and analysis front in recent years, the topic is still in its early days. Tackling gender in the field of human rights and development dates back decades. Good data and analysis led to mainstreaming policy at places like the UN, the World Bank and the Regional Development Banks, the State Department and USAID, as with many donor governments around the world. This provides the IMF with a tremendous opportunity to do the same exercise when it provides economic assessments of countries around the world. The IMF has ramped up in recent years dialogue with member countries on issues like inclusive growth and labor markets, and more and more research is pointing to women as key to economic growth. To the extent that the IMF can “mainstream” gender might prove decisive to getting us there. IMF Managing Director, Christine Lagarde says:”More women at work means good news for the global economy” – I couldn’t agree more.
“The IMF is pushing forward the gender driven growth agenda in an important economy right now: Japan. Japan’s last Article IV assessment highlighted the need to increase women’s participation in labor markets to stem demographic decline and drive future growth. Christine Lagarde personally advocates on this issue. Full integration of women in the Japanese economy is now gaining attention at the top level of government. Prime Minister Abe, who campaigned on increasing women’s participation in Japan’s economy to drive future growth, has claimed “women are Japan’s most underutilized resource.” Prime Minister Abe has rightfully placed the issue of improving women’s participation in the economy as a growth imperative squarely on top of the policy agenda, the third arrow of “Abenomics”.
Full story at: http://www.state.gov/e/oce/rls/2013/211088.htm