Digging Deeper: Aligning Your Financial Life to Your Values
Teaching personal finance at a (very) liberal arts institution lead me to include discussions of socially responsible investing in my curriculum, tempering student activism with some realism. The title of a recent Forbes article: Social Investing: The Good, the Bad, and the Ugly kindled my interest in tackling the subject once again. The tragic experience in Florida and the massive teen response to it makes me think it may be a good time to help our students work through positive ways to channel...
Financial Education Explained by Danielle: My Caffeinated Ethical Dilemma
Have you ever been in a ethical dilemma that you weren’t sure how to remedy? Well, this is my story. Last summer, my longtime friends and I got into the habit of frequenting a small town cafe a few days a week to complete our homework. We somehow rationalized with ourselves that it was okay to spend money because we were supporting the city’s economy:) I know, not the best budgeting habits, but spending money is technically good for the economy, right?
One day, I was using my...
Let's Get Philosophical: What's the Purpose of Companies?
By Tim Ranzetta
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Jan 21, 2018
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Current Events, Article, Audio Resource, Ethics, Policy, Teaching Strategies
Make a profit OR serve other constituencies, like customers, employees and communities. The "maximize shareholder value" mantra (a.k.a. the stock price is all that matters) for public companies has been in vogue for the past several decades. However, if pronouncements from a top investor is any indication, there may be a shift afoot. Business teachers might enjoy taking this current event into the classroom and using it to spur a debate.
Larry Fink, CEO of BlackRock, an asset manager with over...
Article: How Online Shopping Makes Suckers of Us All
By Tim Ranzetta
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May 15, 2017
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Article, Behavioral Finance, Research, Budgeting, Purchase Decisions, Current Events, Ethics
Rather long (about 15 minute read) but intriguing article from The Atlantic that provides great context for trends that I have blogged about the growth of online shopping (here and here). The article describes how in this era of “big data” retailers are harnessing consumer information to price discriminate and obliterate the concept of a fixed price.
Here are a few excerpts:
Death of fixed price: “This could be seen as the final stage of decay of the old one-price system....
Skill Development: Building Media Literacy Skills
The world of personal finance is constantly changing…the products that students are evaluating today will be different tomorrow…robo-advisers, target date retirement funds, Venmo, mobile banking didn’t exist just a few years ago. This makes media literacy such a critical skill to develop in our students. To become financially capable they will need to be lifelong learners and know what sources to turn to in order to get quality, credible information. Unfortunately, in this era...
We Have Heard This Tune Before...
Headline from last week’s Wall Street Journal: Merrill Brokers Get Ultimatum: Refer New Customers or Face A Pay Cut. Huh? Didn’t we just read about another financial services firm creating phony customer accounts because of cross-selling pressures (here and here)? The more things change, the more they stay the same. Read through to the end for ideas on how to empower your students to not fall into this cross-selling trap of being pushed a product that may not be in their best...
Interactive: Grappling With The Ethics of Self-Driving Cars
By Tim Ranzetta
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Dec 05, 2016
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Ethics, Activity, Research, Teaching Strategies, New Products, Current Events, Activities, Interactive
Skimming this FT article about Apple’s efforts in the autonomous vehicle market, I was intrigued with the introduction of ethics into the conversation:
Apple urges the regulator to continue “thoughtful exploration of the ethical issues” of self-driving cars.
“Because automated vehicles promise such a broad and deep human impact, companies should consider the ethical dimensions of them in comparably broad and deep terms,” Apple writes. These considerations include privacy, how the...
Video: How Did These NFL Players Lose $43 Million?
By Tim Ranzetta
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Oct 24, 2016
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Behavioral Finance, Question of the Day, Investing, Current Events, Video Resource, Financial Scams, Ethics
From 60 Minutes (14 minute video):
Questions:
What was the investment idea that burned so many NFL players?
Why do you think the NFL players were so attracted to this idea?
How much money did Mr. Rubin raise for the Country Crossing project?
What were Mr. Rubin’s incentives? Did he make money even if the investment failed? How?
Why did the investment fail?
Based on the fact that some players lost their homes after this investment failed, how much of their wealth do you think they...
If You Are A Teacher Enrolled In a 403(b) Plan, Please Read This!
By Tim Ranzetta
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Oct 24, 2016
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Article, Behavioral Finance, Career, Policy, Index Funds, Investing, Stocks, Current Events, Ethics
This is a great example where your knowledge of investing can come in handy for yourself and other teachers in your building. The NY Times story shows what happens when light regulation meets rapacious financial firms. This is why financial literacy is so important! We can wait for regulation or we can arm ourselves with the knowledge necessary to avoid disasters like the story told below. Without knowing the right questions to ask or understanding the alternatives, too many teachers have seen...
Workplace Ethics: What Would You Do?
By Tim Ranzetta
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Oct 10, 2016
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Ethics, Behavioral Finance, Career, Teaching Strategies, Current Events, Credit Reports
While on my way to the airport to catch a flight to Richmond, Virginia for the Virginia Financial Literacy Summit (stop by our Roundtable from 9:30-10:30am if you are attending the summit!), I listened to this 18 minute Planet Money podcast [warning: coarse language (bull!@#$) in first minute]:
The podcast focuses on the cross-selling techniques of this national bank from the perspective of an entry-level employee whose responsibility was to execute the “eight is great” strategy....
Question: How Can Fake Bank and Credit Accounts Impact Your Credit Score?
By Tim Ranzetta
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Sep 28, 2016
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Article, Credit Scores, Credit Cards, Current Events, Credit Reports, Audio Resource, Financial Scams, Ethics
For those of you following the Wells Fargo fake account saga (some Senators might use more choice terms to describe their actions), your probably familiar with the details of millions of fake bank and credit cards that were set-up by overzealous branch employees trying to hit their sales quotas (I posted how this case is emblematic of why consumers better understand the sales incentive structure for financial products).
Hat tip to Jessica Endlich for pointing out the additional harm that may...
Why Do Incentives Matter In The World of Financial Services?
By Tim Ranzetta
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Sep 14, 2016
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Ethics, Activity, Behavioral Finance, Credit Cards, Checking Accounts, Teaching Strategies, Current Events, Article, Financial Scams
You might want to add another question to ask that well-dressed salesperson who is selling you a financial product (or any other product for that matter):
How are you being compensated?
I bring this up as the clouds continue to darken over a certain financial institution who has been in the headlines recently:
Wells Fargo opened a couple million false accounts (Bloomberg)
Wells Fargo fired 5,300 workers for improper sales push. The executive in charge is retiring with $125 million. (Chicago...
How Do You Teach Money Values and Beliefs?
By Tim Ranzetta
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Sep 07, 2016
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Behavioral Finance, Lesson Idea, Teaching Strategies, Purchase Decisions, Video Resource, Article, Writing assignment, Ethics
Elizabeth Justema, a first-time personal finance teacher from Summit High School of Bend, Oregon, shared resources that she developed to facilitate student reflection on their money values and beliefs (listen to her podcast here). She hopes this set of resources answers a set of essential questions and achieves specific learning objectives that she outlined below:
Essential Questions:
What are my values/needs/wants?
What is my perspective on money?
What are the origins of those...
Video: What Does It Take to Be An Effective Altruist?
Sorry, but on a roll now with this theme of charitable giving (check out this podcast with Eileen Heisman, leader in the world of philanthropy). Here is a thought-provoking TED video with Peter Singer, ethicist from Princeton (Warning: the first 1:30 of this 17 minute video involves a car accident involving a young child is extremely difficult to watch for many reasons) :
What do I like about the video?
He addresses head-on many objections that people have to giving:
How much of a...
For Econ Teachers Looking To Bring Supply and Demand Curves To Life...
By Tim Ranzetta
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Aug 01, 2016
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Article, Behavioral Finance, Purchase Decisions, Current Events, Math, Ethics
The departure of Lin-Manuel Miranda could mean lower demand for “Hamilton” tickets — and lower profits for ticket scalpers. Credit: Sara Krulwich/The New York Times
What happens when demand far outstrips supply as it has done for tickets for the Broadway smash “Hamilton?” Prices go up and scalpers mint money. NY Times takes it from there (I bolded the final line):
On July 9, Lin-Manuel Miranda, the founding father of “Hamilton,” took his final bow in the title role of...
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