The Shocking Truth About Business Education and Financial Literacy

One of the best parts of being a university professor is working with undergraduate honors students. To graduate as part of the Honors College, students must complete an original research project. The whole process takes them about two years, but I get the opportunity to work with some really great students and teach them the joys and sorrows of a research academic. Right now I have two students working on topics related to financial literacy, which is a great signal that college students are getting the message. The results of one student thesis project, however, were surprising.


financial literacy and business education


The hypothesis for the thesis was that business majors are more financially literate than non-business majors. On the surface, it seems like it should be a simple answer. Business students are trained in the ways of accounting, finance, marketing, and management. Financial literacy should be a result of their education. Over 400 university students responded to a survey that included sixteen financial literacy questions from the JumpStart Coalition’s test. On average, students answered half of the questions correctly. Business students, however, did not do any better than the non-business students. As a finance professor, this was not a pleasant discovery.

In this study only age and financial experience significantly influenced overall financial literacy. Whatever we are teaching, it is not helping with financial literacy.  What seems to be happening is that with age and more real-world experience, students are exposed to more financial decisions and become more financially literate. In this survey financial experience is measured by the total number of financial activities in which you engage (i.e. owning stock, having a retirement account, having a checking account, having a credit card, having a student loan, having a mortgage, reading the financial news, etc.). It makes sense that engaging in more financial activities would result in the student gaining more financial knowledge.

There is one positive result with respect to business students.  They do have a higher level of financial experience than non-business students. So, it is possible that business students do have a higher level of financial literacy compared to non-business students. The difference, however, does not come from being a business student.  The difference only exists if business students are encouraged by their education to become more engaged and active with their personal finances.

What are business educators to do with this information? Should we throw up our hands and give up? Absolutely not! We need to realize that financial literacy cannot be taught from a textbook. Financial literacy curriculum needs to be implemented early and emphasize applied and practical exercises.


Do you think personal finance should be a required course in public schools? What is the one piece of financial knowledge you wish you had as a college student?