MSE News: MPs' financial education in schools debate next week

In a poll on this site last year, 97% of the 8,000 surveyed supported financial education in schools.

Where was this? I don't remember it.

Also, I'm sure a lot of those people support the idea of financial education in schools but have questions as to how it will be timetabled in and taught. Really though, I don't see the point of this thread, it will turn out exactly like the last one on this topic.

MSE_Martin wrote: »

I've just clicked in to this thread. What an incredibly depressing bah-humbug response to what is fantastic news. Gees folks - thanks.

I have not seen any specifics about this, and that is what concerns me.

I had so-called financial education whilst at school (be about six or so years ago now), and it was, frankly, rubbish.

VT82 wrote: »

I'm not particularly fussed about it either way to be honest.

But one thing I remembered from the last time was one of the examples of what could be taught in such a lesson was - 'Why do you think supermarkets put impulse buys by the checkout? To take money off you!'. I think this is condescending, and I also think that it's a slippery slope to grinding the economy to a halt. Companies are allowed to make money you know, as long as they treat people fairly.

Why don't I put this the other way.

I studied marketing for three years and continue to have a strong interest in behavioural economics. Along the way, I've essentially learned the direct marketer's toolkit of different approaches which are designed to engineer a positive sales environment and encourage people to purchase.

Very often this is a creative mixture of understanding psychology, consumer behaviour and making good use of information disparity (ie, the company usually knows more about the product than the consumer). These can be proven to have a significant effect on the amount and type of purchases that customers make.

The same is true for techniques taught to salespeople.

That these have a noticeable effect on customer behaviour suggests that customers DO NOT act in rational ways, no matter what they might believe. If they did act completely rationally, then it shouldn't matter how the marketing team present things.

Assuming that customers tend to make a lot of decisions on autopilot or by using rules of thumb is a core principle of behavioural economics. If you accept this, it becomes clear that the potential gain for companies that can gently mislead customers into spending more are huge.

Supermarkets are absolute masters of this - actually look around at the environment next time you're in one. Its all designed to maximise the chances of you buying things. All of the most popular purchases are set in different aisles - why? So you have to spend more time walking around the store and seeing other things you might buy. Impulse buys are in eye-catching places where you tend to spend more time - like the ends of aisles or at the checkouts.

Products that appeal to younger children are placed at the eye level of younger children (yes, they are that cynical). The best deals are often found shoved at the bottom of shelves or at the top, out of easy eye level. If a large bottle of something is on offer, that doesn't mean its cheaper than buying two smaller bottles to get the same amount. Many people assume it will be and don't check.

Then you can get to the really manipulative elements. Off the top of my head, changing the lighting that meat is placed under so that it looks more appetising. Pumping smells of freshly cooked bread around the bakery department. Changing the packaging so that 'value' products look cheap and cheerful and premium ones look expensive to justify a significant price difference...even if the contents are practically identical.

All the while, the brands on display are themselves are engaged in a war against our inbuilt laziness to choose something we know we like rather than try something new (which we might not like). These are decisions we often make out of habit or laziness, so there's a lot of value for a brand in incentivising customers to try them out for the first time - its no accident that strongly established brands are less likely to offer price promotions, coupon offers, etc.

If you were aware of all of these and believe that you act to stop yourself being influenced by them, then you're a rare kind of consumer - a money saving expert who marketers will hate. Or, more likely, you've deluded yourself into believing that these techniques don't influence you if you let your mind go on autopilot while you're shopping. They do - its why they're still being used.

Teaching children awareness of this type of activity is essentially suggesting that learning the basics of marketing techniques is in people's best interests to make them better informed consumers and less prone to manipulation. I'd say this is a good thing.

Plus, its just one example. Getting people to understand the principles of how debts like mortgages and financial instruments like credit cards (etc.) work also makes a lot of sense, given how the difference between handling these sensibly and not can have a huge impact on people's lives.

Yes, it requires teachers to actually think about how to teach it effectively and avoid being condescending. Yes, it means that something else may need to be nudged out of the curriculum. These are downsidesm but do I believe its valuable to get the right kind of financial education into schools? Absolutely yes.