Transcript Coming to Consensus: A Delphi Study to Identify the

Coming to Consensus:
A Delphi Study to Identify the Personal
Finance Core Concepts and Competencies
of
Undergraduate
College Students
M.J. Kabaci, Ph.D.
University of Georgia
Society for Financial Education and Professional
Development Conference
October 15, 2012
Based on Dissertation
Research
• Identification of Personal Finance Concepts & Competencies
of 3 specific groups:
• Undergraduate College Students
• Student Education Loan Recipients
• First-Generation College Students
• Two Questions were Addressed:
1. What are the specific personal finance concepts
2. What are the specific personal finance competencies
that are important for specific groups of college students?
Introduction
• College is the first opportunity for young adults to make significant
financial decisions on their own. (Shim, Serido, & Xiao, 2009)
• The concern among researchers, educators, and policymakers:
• College students may not have acceptable levels of financial
knowledge and skills
• College students may not demonstrate appropriate financial
behaviors that exemplify positive financial decision-making to live
within their means and relatively debt-free.
• Based on prior research on college students’ financial management
• (Allen & Kinchen, 2009; Avard, Manton, English, & Walker, 2005;
Grable & Joo, 2006; Hayhoe, Leach, Allen, & Edwards, 2005; Lyons,
2003; Lyons, 2004c; Mandell, 2008; Markovich & DeVaney, 1997;
Norvilitis & Santa Maria, 2002; Pinto & Mansfield, 2006; Sallie Mae,
2009).
Part of the College Life?
• Students may acquire financial experience by the time they
graduate from college, but they also acquire debt as well.
• On average, to finance their education, 2 out of every 3
college undergraduates
• incur some form of conventional education debt (e.g., federal
student loans)
• seek private loans
• and/or turn to credit cards (Pinto & Mansfield, 2006).
• In addition to student loan debt, many undergraduates carry
record-high credit card balances.
• College students carry an average credit card balance of $3,173
(Sallie Mae, 2009).
However…
• Not all undergraduate college students carry high levels of
debt or any debt at all.
• Having debt is not necessarily a negative position for
undergraduate college students.
• Education and training are the most important investments in
human capital (Becker, 1975).
• College students are encouraged to establish credit histories and
build credit scores as young adults.
Literature Review
• Financial Literacy and Education Commission identified 5 Core
Concepts (FLEC, 2010)
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Earning
Spending
Saving
Borrowing
Protection Against Risk
• No prior studies that identified specific personal finance core
concepts or competencies
• Teachable Moments
• “Just-in-Time” Concept – (Mandell, 2006)
• Andragogy – (Knowles, 1970)
Literature Review
• Studies that measured students’ knowledge of financial concepts as predetermined by researchers
• Concepts included borrowing, budgeting, saving, & investing
• Definitions
• Financial Literacy – “Knowledge of basic economic and financial concepts, as
well as the ability to use that knowledge and other financial skills to manage
financial resources effectively for a lifetime of financial well-being”1
• Financial Knowledge
• Financial Behavior
• Identified studies that examined students’:
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1Hung,
Financial knowledge
Credit knowledge
Financial behavior
Credit behavior
At-risk financial behavior
Effects of “teachable” moment
Parker, & Yoong, 2009
Literature Review
• Previous studies focused on general personal finance topics
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Budgeting
Savings
Insurance
Investing
Credit
• Findings found:
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Students are lacking in financial knowledge
Students fail to perform proper financial behaviors
Financial knowledge increases by year in college
Students tend to have higher financial literacy regarding issues
that affect them personally.
• Studies focused only on specific concepts rather than a general
scenario
Statement of Problem
There is a lack of consensus among
researchers, educators, and policymakers
regarding specific core concepts and
competencies of personal finance that
undergraduate student education loan
recipients should possess
Methodology
• Delphi Method
• a combination of qualitative and quantitative research methods
to build consensus among individuals identified as experts in a
particular field/industry.
• primarily used to facilitate the formation of a group judgment and
tends to be used in evaluation when significant expertise exists
on the subject
• Individuals invited to serve on panels based on criteria of:
• Possessing knowledge and expertise in college students’ financial
literacy issues; and/or
• Having taught personal financial education to college students.
• 36 individuals agreed to participate in 1 of 3 panels
Survey Instruments
• First Online Survey
• Identification of expertise, experience & demographics of panel
• To assign panel members to one of three groups
• 21 Panelists in Undergraduate Student Education Loan Recipients
group
• 17 completed all surveys
• Second Online Survey
• Ranking of importance of personal finance concepts &
competencies
• 3 “Rounds”
• List of competencies
• FLEC
• Prior studies
• Input from committee and researcher
Survey #2
• Round One
13 Personal Finance Concepts
Borrowing
Budgeting
Consumer Protection
Credit Management
Debt Management
Employee Benefits /
Income
Financial Planning
Financial Services
Insurance
Investing
Saving
Student Financial Aid
Taxes
• Plus, 226 personal finance competencies
Sample Page from Round One
Survey #2
• Questionnaire in subsequent rounds of second survey
designed based upon results of previous round.
• Panelists’ suggestions for additional concepts/competencies
encouraged
• Concepts and competencies that gained consensus removed
from consideration
• Identified with mean ranking
• Remaining Concepts & Competencies
• Range of responses between 1st & 3rd Quartile
• Panel members’ own responses
Sample Pages from Survey #2
(Round Three)
Data Analysis
• Descriptive Statistics
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Mean
Median
Standard Deviation
1st and 3rd Quartiles
Interquartile Range (IQR)
• IQR used to determine consensus
• IQR < 1 (Automatic Consensus)
• IQR = 1 and majority of panel members in agreement with
median (Acceptable Consensus)
• Relevance of consensus items ranked by mean
Results
• In Consensus
• 7 Personal Finance Concepts (mean rankings)
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Borrowing* (1.4)
Saving* (1.4)
Budgeting* (1.5)
Student Financial Aid* (1.7)
Insurance * (1.8)
Financial Services (2.6)
Consumer Protection (2.7)
• 140 Personal Finance Competencies
* - “Most Important”
Results
• Borrowing Competencies
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Explain the use of credit reports in credit applications*
Explain how to compare terms of credit card offers*
Compare and contrast types of loans to finance college expenses*
Describe the costs and benefits of borrowing*
Identify the criteria used to assess qualifications for credit*
• Saving Competencies
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Explain why it is important to save money for an emergency fund*
Compare instruments for short- and long-term saving*
Describe the effects of inflation on savings and personal income*
Explain the risk of inflation on savings products*
Compare and contrast saving instruments*
* - “Most Important”
Results
• Budgeting Competencies
• Construct a budget*
• Describe the function of an emergency fund in money
management*
• Define and calculate time value of money*
• Explain how one’s income and spending and saving choices
determine one’s standard of living*
• Explain the difference between fixed and variable expenses*
• Student Financial Aid Competencies
• Compare and contrast various types of student education loans
including federal loans, parent loans, and private loans*
• Describe the consequences of defaulting on student loans*
• Explain student loan consolidation*
• Describe deferment and forbearance**
• Complete a FAFSA form**
* - “Most Important”
** - “Very Important”
Results
• Insurance Competencies
• Explain the impact deductibles have on premiums and the
consumer’s loss*
• Explain health insurance*
• Explain vehicle insurance*
• Explain risk and how insurance can mitigate losses due to risk*
• Explain property insurance
• Financial Services Competencies
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Explain simple and compound interest*
Explain debit and ATM cards**
Identify risks and protections associated with debit and ATM cards**
Identify the types of fees charged for financial services**
Compare and contrast banks, credit unions, savings and loan
institutions, brokerage firms, insurance firms, asset management
firms, and other types of financial institutions.**
* - “Most Important”
** - “Very Important”
Results
• Consumer Protection Competencies
• Describe policies that protect consumers from identity theft**
• Explain purchase and marketing techniques to stimulate impulse
buying**
• Describe policies that protect consumers from fraud**
• Describe policies that protect consumers from deception**
• Define terms used in consumer protection**
* - “Most Important”
** - “Very Important”
What Didn’t Gain Consensus?
• Personal Finance Concepts
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Credit Management (1.6)
Taxes (1.7)
Debt Management (1.8)
Financial Planning (2.1)
Investing (2.2)
Employee Benefits/Income (2.4)
• Competencies
• Identify resources (published, online, and human) to refer to for help in (name of
concept)
• Explain consumer rights and responsibilities
• Explain techniques to manage a credit card
• Compare and compute regular wages and overtime wages
• Demonstrate basic skills for use of a checking account, including withdrawals and
deposits, debits, and reconciling statements
• Compare and contrast various forms of financial aid including loans, grants, workstudy programs, and veterans’ programs.
Future Research
• Establish new Delphi panels
• Examine select current undergraduate personal finance
curricula using content analysis
• Identification of personal finance education programs and
materials appropriate for “best practices”
• Identify college students’ perceived needs of personal finance
concepts and competencies
Final Thoughts
• A college degree is a good investment in human capital.
• Positions and careers for college graduates are expected to be the
fastest growing category of employment in the country.
• Graduates have more accessibility to benefits
• 401(k) retirement plans
• health insurance
• Are more likely to be involved in financial decisions involving
financial planning and investments.
• The benefits of a financial education are greater for college
graduates, who will have more money to manage over their
lifetimes than non-college graduates.
• A college education is not cheap.
Coming to Consensus:
A Delphi Study to Identify the Personal Finance Core Concepts and Competencies
Undergraduate College Students
M.J. Kabaci, Ph.D.
Lecturer
Housing and Consumer Economics
[email protected]