DATE: Friday, June 6, 1997                  TAG: 9706050020

SECTION: LOCAL                   PAGE: B11  EDITION: FINAL 

TYPE: Opinion 

SOURCE: Keith Monroe 

                                            LENGTH:   79 lines

GIVING MONEY A PLACE ON THE CURRICULUM WOULD PAY DIVIDENDS A NATIONAL SURVEY TESTED THE PRACTICAL ECONOMIC KNOWLEGE OF HIGH SCHOOLSENIORS. IT WAS ESSENTIALLY UNDETECTABLE BY ORDINARY MEANS. THE AVERAGE GRADE WAS A FAILING 57 PERCENT. <

When I was in high school, a one-semester elective was offered in economics. It was taught by the wrestling coach who managed to make the dismal science laughable. The course was populated by bulky men with 18-inch collars. Attendance pretty much assured a passing grade.

A recent new report suggests that nothing much has changed. A national survey tested the practical economic knowledge of high school seniors. It was essentially undetectable by ordinary means. The average grade was a failing 57 percent. Dismal indeed.

A sample of the results shows that only 49 percent understood that if income doubled - from $12,000 to $24,000, say - income taxes would at least double. Only 32 percent knew that they'd have to pay income tax on interest from savings, if they managed to save anything. Clearly, these young people are in for a rude awakening.

A stunning 85 percent believed that U.S. savings bonds or a savings account would offer the best return over 18 years of saving for college. Only 15 percent knew that stocks have historically outperformed all other investments over the long term.

It's curious that America, a country that celebrates capitalism, free enterprise, the market and the creation of wealth, so thoroughly neglects the teaching of such topics. The business of America is business, Calvin Coolidge is supposed to have said, but you'd never know it from the curriculum.

We're not talking about a course in the more abstruse doctrinal disputes of of Adam Smith and David Ricardo, Marx and Malthus, Schumpeter and Keynes here. We're talking about balancing your checkbook, calculating interest rates, acquiring a mortgage and using credit cards without self-destructing. We're talking about shopping, for goodness' sake - America's secular religion.

Yet the average high schooler emerges from the educational experience unscathed by useful economic information. Four years of English, a little history, a smattering of geometry and algebra, the dismembering of a frog, but not one syllable about debt and investments, retirement and savings, the magic of compound interest.

This is stupid because, increasingly, financial knowledge is going to be a needed survival skill. The days when one's money would take care of itself are long gone. Before the nation was seduced by credit cards, it was harder to go into debt and the consequences were more immediately apparant.

Once employees had little choice but to leave their planning for retirement to the company pension plan. But now employees shift from job to job, the long-term outlook for Social Security is cloudy and many companies are shifting the responsibility for retirement planning to the employee who must manage his own future with self-directed pensions, IRAs, 401(k)s.

For the person who can't calculate a 15 percent tip, the world of small caps and bond yields, asset allocation and balance sheets is likely to be a tad daunting. And in America, the land of the rugged individualist, the answer is too often: every man for himself. And, oh, by the way, caveat emptor.

But in a real sense, we're all in this together. Capitalism may work because of individual choice, but when the uninformed meet the unscrupulous whole societies can be shaken. Consider the extreme example of Albania where thousands of naive investors lost their life savings in a gigantic Ponzi scheme masquerading as capitalism. The result was blood in the streets and a toppling government.

If such things as the education of the next generation and the retirement prospects of our own are going to depend on individual market decisions, it would seem only prudent to provide every decision maker with some rudimentary training in how markers work and how money should be handled.

Among those who agree are the Federal Reserve Board, the U.S. Office of Consumer Affair and leaders of the financial industry. In light of the dismal scores on the economic survey, they are encouraging public schools to teach personal finance as a fundamental life skill.

They're right. And that obviously means it shouldn't be an elective taught by a wrestling coach but a required course taught by a financially savvy instructor. Schools provide sex education, in part, as a public-health measure. They ought to provide money education in order to protect the public's economic health. Such courses could turn out to be highly popular. Money is almost as interesting as sex, and handled properly has the potential to last a lot longer.

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