Stanford Graduate School of BusinessIFDM TPF Session 5: Using Data to Strengthen Teaching
Stanford Graduate School of Business
A Fed-focused session on data 0:10
The session brings together the St. Louis Fed team to show how data can strengthen the teaching of personal finance. Carlos, the director of research, explains that policymaking and personal finance rely on the same core principles, applied at different scales, from a nation's income down to an individual's income, and both rely on storytelling built from data rather than on finding a single right answer.
What FRED actually offers 3:00
Diego introduces FRED, the Federal Reserve Economic Data platform, clarifying that despite its name it covers all kinds of economic data, not just interest rates or monetary policy. The practice traces back to Homer Jones, who began circulating typed memos of data in 1961 because he believed public access to trusted data helps people make better decisions. FRED now holds over 845,000 time series, lets you search, visualize, download, and even pull data through an API, Excel add-in, or soon an AI assistant connector, and it draws more web traffic than almost any other Federal Reserve site.
Using FRED in the classroom 9:33
Diego suggests searching the FRED blog with plain language instead of hunting through raw data series. As an example, he shows a graph comparing the cost of owning a home to the cost of renting, a ratio currently at very high levels, which can anchor a classroom discussion about whether to buy or rent. He points to federalreserveeducation.org and a free classroom newsletter, issued four times each semester, as further resources, and notes that teaching with real data means embracing messy numbers instead of the clean diagrams typical of economics classes.
Measuring financial literacy 14:31
Anna Marie shares findings from the Big Three financial literacy questions she and Olivia designed, simple enough to ask in any country. Using the National Financial Capability Study, she notes that only 28 percent of Americans can answer all three correctly, with risk and diversification the weakest area. Younger people, who fill college classrooms, know the least, and a gender gap in financial literacy appears worldwide, emerging as early as high school in places like Italy and parts of Latin America.
Gaps in Financial Knowledge 18:02
Risk is the topic people understand least, both in the US and worldwide, so a personal finance course probably should not open with investing but build up to it gradually. Large gaps exist across gender and socioeconomic groups, and a yearly survey started in 2017 with TIAA grew from the original three-question big three into a 28-question checkup covering eight personal finance topics. Even so, average scores amount to a failing grade, with only about half the questions answered correctly, and a quarter of Americans cannot answer even seven of the 28 questions. Scores are not improving nationally, young people know the least, and the weakest topics remain risk diversification, investing, and insurance, which matter most for building wealth and coping with high inflation.
A Shorter Eight Question Measure 23:00
The 28 questions have been distilled into eight publicly available questions that serve as a strong proxy for the full set, and the original big three remain a good stand-in if only three questions can be used.
A Classroom Toolkit 24:00
A new toolkit lets instructors give students the big three or the eight questions, then discuss the answers using curated explanations and stories, breaking results down by gender and generation to show how knowledge gaps and stagnating scores can motivate students.
Connecting a Calculator to FRED Data 29:00
A debt payoff calculator shows a $10,000 credit card balance at 23 percent interest taking 77 months to clear at $250 a month, and linking it to the FRED database corrects the rate to 22.15 percent, shortening payoff to 74 months, while doubling the payment to $500 cuts the time to 26 months, illustrating how FRED can serve as a trusted check on numbers, even against AI-generated answers.
Data Availability for Researchers 32:06
Asked whether the full 28-question dataset will be open to researchers, Dr. Lusardi explained it remains proprietary because of the ongoing yearly collection and analysis work, but the eight-question version and its data are being made publicly available, since that shorter set already captures what is needed without requiring all 28 questions.
Using Fred Data and Repeat Testing 34:00
A presenter explains that aggregate statistics from the toolkit are made available for others to use in their own courses, and notes that her own course design, including the sequence of topics, was built directly from this kind of data. An audience member from UNC Pembroke asks whether a username and login system could let instructors save student results and compare scores from the start to the end of a semester. The panel confirms this kind of repeat testing is part of a future version of the tool, since it would require proper database management, but agrees that tracking improvement over a semester is the long term goal.
Information Overload and Fin Influencers 38:00
A question from a university professor in Zaragoza links declining scores on understanding risk to behavioral finance and the rise of finance influencers, where people feel more informed than they actually are. The panel agrees that too much information can create paralysis by analysis, comparing a short booklet to a 25 volume encyclopedia, and notes that processing information is never free or costless. They suggest finance influencers rise partly because people seek shortcuts to complexity, and that laziness can spur both creativity and confusion.
Data Shaping National Policy 39:02
A founder of a Brazilian financial education startup asks how data can influence public policy and scale solutions. The response describes leading Italy's financial literacy committee, using data showing poor national rankings to justify a strategy, and publishing annual checkup style results that drew strong media attention despite a modest 70,000 euro budget. This data also guided program design and evaluation, reinforcing that evidence driven policy work is achievable.
Central Banks and Monetary Policy Link 41:31
The discussion turns to central bank involvement, noting that the European Central Bank has collected Big Three financial literacy data since around 2020 across eleven countries. Research shows that people with low financial literacy respond less to interest rate changes, meaning monetary policy must work harder to have effect, making financial literacy a must have rather than a side issue. Christine Lagarde is credited with spotting a persistent gender gap in literacy across all European countries and convening central bank governors to address it, with a Bank for International Settlements led global push described as a long journey rather than a finished destination.
Course Topics and Fred's Many Sources 45:30
A question about the Pen 8 topic list leads to an explanation that course content, including housing and retirement tools, grew out of piloting during an Econ 43 class at Stanford, with more topics like debt payoff and mortgage calculations added based on survey feedback from other instructors. On Fred, over 124 different data sources are combined into one database, letting users view a single topic such as household financial attitudes from multiple angles, including both government surveys and private sources like Bankrate.
Who Answers Do Not Know 48:30
A final question asks about the demographics of people who answer do not know or refuse to answer on the Big Three financial literacy questions. The response explains these options are essential so people are not forced into random guesses, and that refusals make up less than one percent of responses, disproportionately coming from African American respondents who sometimes view the exercise suspiciously as an intelligence test. The much larger do not know group is described as especially informative and worth further analysis.
Why Don't Know Answers Matter 50:30
Respondents who answer "do not know" are disproportionately women, adding nuance to the data. Researchers use this information alongside correct and incorrect answers, since the "do not know" responses carry useful signal about financial literacy gaps.
Risk Comprehension Is Genuinely Hard 51:00
The lowest-scoring dimension involves understanding probabilities and risk, tested through questions like comparing the riskiness of replacing a fridge versus fixing a car. This mirrors other surveys, where risk questions consistently produce the fewest correct answers. Concepts like inflation acceleration add further complexity, since these ideas are inherently difficult, not deliberately obscured.
Teaching Decisions Not Advice 54:32
The ECON43 course deliberately avoids giving financial advice, instead teaching decision-making under uncertainty. Later sessions cover probability, insurance, investing, and retirement planning once students have the tools to reason through uncertainty themselves.
State Mandates Show Measurable Gains 56:31
State-level data on financial literacy mandates is limited, but research by Carly Urban, combined with Equifax data, shows students in states with high school personal finance mandates perform better, especially in debt management. A 2022 meta-analysis of randomized controlled trials across 33 countries, published in the Journal of Financial Economics, confirms that financial education works.
AI-generated summary. It can be wrong or incomplete - check anything that matters against the original.
