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Naive
Economics |
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Introduction
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| Background | ||||||||||||||||||||||||||||||
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We all know money doesn't grow on trees. Or do we? Young children often have interesting ideas about where money comes from and why we have it. We have all heard astute young consumers tell their parents to "just stop by the money machine" when parents lament the thin state of their wallets. Greenpeace chose to explore children's views about money and economics in general. We wanted to see if children had ideas about the origin of their families' spending money and what that money represents. We hypothesized that at least some of the children wouldn't know that spending money is a finite resource and, eternally hopeful, we wanted to hear where they thought one goes to obtain more. We were equally curious to find out if our interviewees saw money in terms of broader economics: as a substitute for actual bartering of goods and services. Research Subjects We interviewed our own children, nieces, nephews and friends. In total, we taped 8 children ages 3 - 12, although we didn't necessarily include all of them in the edited video. Our stars were:
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| Research Questions | ||||||||||||||||||||||||||||||
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We started
with a broad question, hoping to elicit some misconceptions right up front.
We structured follow up questions to narrow the focus to our own areas
of inquiry.
1. Tell
me what you know about money. |
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Literature
Review
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As children grow they continue to add to their knowledge bases. According to Barbara Heinzerling (co-author of Children and Adolescents in the Market Place), this concept applies to their understanding of money as well. "By the time they start kindergarten, their values, beliefs, and expectations about money are beginning to form." Even though they may have started to develop an attitude toward money, a true or deeper understanding of economic concepts does not set in until the child is older. So the challenge to parents and teachers is to match expectations to the child's abilities. Therefore, it is imperative to understand the developmental stages of children so we know when it is appropriate to teach basic concepts of economics. Students that range from the ages of 3-5, are starting to grasp the concept of using nickels, dimes, and quarters as objects they can trade for merchandise. They are also starting to realize "... mommy and daddy go to work to get money so they can buy things." (How kids Learn about Money, Parenting Oct., 2000) However, at this age they are unable to comprehend more abstract concepts of economics. For example, "...if you ask a child this age why she can't just walk off with a product from a store, she's likely to reply that you have to pay first so you don't go to jail. They don't truly understand that it's the shopkeeper's property," says Heinzerling. "They know not to steal because an authority figure, probably a parent, has told them not to." Another example is that a preschooler's concept of money is quite literal. They believe that the bigger the item the more expensive it will be. McNeal's
research shows that around kindergarten children want to make their
own purchase but they still need parental guidance. By the time they
reach the age of 8 they should be able to make their first independent
purchase. "They're able to think abstractly and can envision
the steps necessary to buy something and follow through," McNeal
says. By age 8, a child is able to distinguish the messages of advertising
and begin to grasp the concept of deferred gratification. However,
they may not be emotionally ready to postpone gratification until
they reach the age of 10 or 11. Jean Sherman Chatzky, believes that America has a problem when it comes to teaching kids about money. American students are not only not getting any school-based finance education, but what education there is has little impact. According to a Finance Literacy group, JumpStart, high school students are unable to answer questions on topics such as: saving, spending, investing, and credit. When high school seniors were given "31 multiple-choice questions about saving, spending, insurance, investing, and credit the average student got 57% right. Three years later, the average score fell to 52%. This year, the average was 50%. Worse, notes JumpStart director Data Duguay, seniors who had completed a money-management course answered 48% correctly." ( Money; New York; Jul 2002) One concern is that we have waited too long to address this topic. Experts believe that high school and middle school is too late to be discussing these concepts because their money habits have been set. By the time a child has reached the age of 12-13, they have developed their own notions about money based on parental and school experiences. If parents and the schools have not addressed these issues then kids may develop habits based on faulty notions that could be costly. In fact,
Teenage Research Associates, a market research firm, learned that
"16- and 17-year-olds spend, on average, $153 a week, 7% have
a credit card in their own name, and 18% have access to a parent's
card. It's a little like trying to teach teens about sex. Research
has shown that you can better mold kids' behavior if you reach them
before they start to practice." (Money; New York; Jul 2002) Therefore,
if children are to develop healthy economic practices, then teachers
and parents need to talk about money in non-threatening ways. Heinzerling
states, "Teaching kids about money and the consumer world isn't
a one-shot deal." It's a process that will take the first eighteen
years of your child's life--and beyond." |
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Data
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In our research we focused on the following five questions:
Upon review of our data it is clear that our subjects had a concept of money that is consistent with the research. For example, when the children where asked why do we have money, they stated that we use it to buy things. According to researchers, children by the age of 3 have begun to realize they can "use nickels, dimes, and quarters as objects that they can trade for merchandise." The literature also addresses the idea that younger children have a difficult time grasping the abstract concepts of economics. This is quite evident when we posed the second question, "Do all things cost the same?" Younger children responded by saying size determined the cost. Maggie, one of the interviewees, said, "...you might pay $100 for something big and maybe $10 for something small." The older kids discussed that price could depend on quality of the item, or the distance the product was shipped. When it came to question three we saw some discrepancies between the research and our study. The boys from the same family (ranging from the age 3-12), stated that money came from daddy working. This is a typical response from children in this age range. (How kids Learn about Money, Parenting Oct., 2000) However, the girls that were interviewed, discussed a "place that makes money." There was no mention of mom and dad working and bringing money home. Answers to the fourth question showed once more that younger children's notions of economics are more literal than those of older children. Our younger subjects said that once you gave a cashier your money it went into the cash drawer. Older students gave responses like, "the money goes to keep the store running, to pay taxes, or the workers." The last question (Can we make our own money?) also supported the current research on children's misconceptions of money. When we posed this question to the younger children, they said you can make your own money if you are creative. The older kids said that you make your own money by getting a job and working. In fact, one subject said it was illegal to actually print your own money. |
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Conclusions
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However, we are not able to draw conclusions on the depth of the students understanding of the principles of economics. There were points in our research where students referred to the notion that a business must pay wages and taxes. But it would take deeper probing questions to see if they truly understood how businesses operate and other economic principles. We can conclude that most children have misconceptions about money. In fact, financial experts say that if parents and schools do not provide guidance in the area of economics that children will not develop "healthy economic practices". This project has certainly caused us to think about future questions that could be asked to make sure the principles of economics are addressed with our youth. If students continued to develop misconceptions about these principles, it will impact their spending habits for the rest of their lives.
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