Financial Literacy – A Public Good?Financial literacy has always been considered a private, rather than a public good, and hence, the theory has always been that the ignorant will only harm themselves. As we now know, financial ignorance hurts everyone. Our latest financial crisis was caused in part by the dangerous convergence of unscrupulous sellers and ignorant buyers. Going forward, most agree that on the seller side, the irresponsible middlemen all need to have more skin in the game, and last month we have discussed ideas to ensure this.
Inversely, we should consider whether responsibility also falls on the buyer. If so, then the financial illiteracy of the American consumer is of grave concern for all of us.
Public institutions have agreed that things like literacy, critical thinking and personal heath are not just private goods, but public goods that should be taught. Marcus Howard and Alex Johnston lead GCG in a debate around Financial Literacy and if we fight financial ignorance at the public level and if so, what are the best avenues to do so? With this subject, do we see an opportunity for new tools such social media, open source hardware/software, and crowdsourcing? If you were part of the incoming administration, how would you go about educating the next generation of financially literate consumers?