The evidence keeps piling up: young people in the U.S. sorely lack financial skills and would benefit from formal instruction. This knowledge void extends beyond basic money management to a sense of where they fit in the global economy, research shows.
College students and recent graduates ages 18 to 26 failed a series of questions about the world economy in a survey from the Council on Foreign Relations and National Geographic. This is a well-educated sample embarking on a career in an increasingly global business environment. Yet few know the unique role of the U.S. dollar or can name our major trading partners.
The global literacy survey asked about geography, the environment, foreign policy and recent international events in addition to economics. Results were dismal across the board. The average student correctly answered 55% of the questions. Many fared much more poorly on the economics segment.
“To contend for jobs, assume leadership positions in government and other sectors, and hold elected officials accountable, young people must understand the global context in which they operate as citizens and professionals,” a report on the findings states. “Yet our survey shows that many individuals educated in this country do not. This constitutes a major national challenge.”
The good news is that 78% ranked knowledge of international economics and finance as extremely or very important to understand—ahead of world history, geography and cultures. Yet only 21% had any exposure to international trade in school.
Only 29% knew that the U.S. economy is larger than China’s and only 10% knew that Canada is our largest trading partner. Most thought China was our largest trading partner. Only 29% knew that the U.S. dollar is a reserve currency with a unique role in international finance and trade, and only 12% knew that a miniscule 1% of the federal budget goes to foreign aid.
These are not necessarily simple questions. But, again, this is an educated group that must be able to navigate global commerce in the course of their budding careers. The findings follow an important study in 2014, when the Program for International Student Assessment found that 15-year-olds in the U.S. ranked ninth out of the 18 nations in personal financial skills. The trend is not a good one and underscores the need for financial education.