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<\/a>been promoting financial education in public schools and urging people to become more resourceful. Time<\/em> Magazine<\/em> reported polls showing \u201c99 percent of adults in agreement that personal finance should be taught in high school.\u201d[i]<\/a>\u00a0 The Federal Reserve argued that \u201cfinancial literacy and consumer education, coupled with strong consumer protections, make the financial marketplace \u2018effective and efficient\u2019 and assists consumers in making better choices.\u201d[ii]<\/a> Many colleges and universities have started making financial literacy courses graduation requirements. And for some it has worked, as many Americans \u201cput their own budgets under the microscope \u2013\u2013akin to what financial analysts routinely do when the scrutinize companies.\u201d[iii]<\/a><\/p>\nCreativity is becoming became a buzzword in new push for consumer education, as people are urged to find alternatives to mindless shopping.\u00a0 Articles began appearing in the press about \u201cCreative Ways to Spend Less\u201d and \u201cCreative Money Saving.\u201d[iv]<\/a> Meanwhile, studies began appearing on the relationship between creativity and thrift.\u00a0 In an essay entitled \u201cCreating When You Have Less,\u201d University of Illinois consumer analyst Ravi Mehta cited research showing that people with less money instinctively found innovative alternatives. \u201cIf you look at people who don\u2019t have resources or only have limited resources, they end up being more creative with what they have,\u201d Mehta said.[v]<\/a> This is frequently seen in nations with high poverty rates. \u201cWhen times get tough, resource-poor people become more creative in their use of everyday products.\u201d Conversely, wealthy populations seem less conditioned to do so. \u201cAbundance is our default setting here in the U.S.,\u201d Mehta explained. This has lead everyone \u2013\u2013 producers and consumers alike \u2013\u2013 to become less inventive. \u201cAs we become a more abundant society, our aggregate average creativity levels decrease,\u201d Mehta concluded.[vi]<\/a><\/p>\n Amid this outpouring of financial education and incentivized creativity, people got smart about money for the first time in decades. But the pattern soon reversed. Call it short-term memory or the hubris from a recovering economy, but in recent years Americans have slipped into old habits. Creative approaches to personal finance are on the decline and household budgets again are in trouble. Not helping matters has been a dramatic increase in consumer borrowing, with U.S. credit card debt for the first time topping $1-trillion in 2017.[vii]<\/a>\u00a0 Student loan obligations have broken records at $1.3-trillion \u2013\u2013 or, double what they were a decade ago \u2013\u2013 while defaults on mortgages and car loans again have hit all-time highs.[viii]<\/a> And for 25 percent of working families, stagnant wages drove additional borrowing for child care.[ix]<\/a> \u201cIt took nearly a decade, but debt has made a comeback,\u201d the New York Times<\/em> recently reported \u2013\u2013 adding that the numbers are now dangerously close to those triggering the recession.[x]<\/a> Yet people just don\u2019t seem to understand the problem.<\/p>\n Even the business press now is sounding alarm bells about America\u2019s na\u00efve money habits \u2013\u2013 with articles again calling for basic consumer education. \u201cThe U.S. has a financial literacy issue, and the problem is both deep and potentially highly damaging to the U.S. economy,\u201d explained one account of families behind on mortgages, living on credit cards, and spending more than they earn.[xi]<\/a>Unfortunately, many people find it hard to resist the dynamic of borrowing and spending. Shopping is easier than creative thinking, many experts contend.[xii]<\/a> And schools again are no longer helping. A recent CNBC <\/em>headline read that \u201cU.S. Schools Get a Failing Grade for Financial Literacy.\u201d According to CNBC<\/em>, \u201cThe number of states requiring high school students to complete a course in economics has dropped over the past two years, and mandates for personal finance education in upper grades remain stagnant\u201d \u2013\u2013 leaving 60 percent of the country without such education.[xiii]<\/a> Even FoxNews<\/em> has chimed in, stating that \u201cSurvey after survey show Americans don\u2019t understand basic financial concepts,\u201d adding that over 60 percent of high school students can\u2019t answer even basic questions about budgeting or how to write a check.[xiv]<\/a> Meanwhile, as economics courses dwindle in the U.S., nations like Australia and the United Kingdom quickly are moving in the opposite direction, mandating financial literacy for all young people while also boosting creativity offerings.<\/p>\n What\u2019s behind this education gap in such a vital area? Is it a lack of information? The way finances are taught? Remember that Americans are an independent breed with an instinctive aversion to authority. And in more general terms, they prefer practical learning over anything theoretical. In a column entitled \u201cWhy Financial Literacy Fails,\u201d investment advisor J.D. Roth explained that money management courses fall short because they don\u2019t connect to people\u2019s real life experience. [xv]<\/a>\u00a0 \u201cWhen I was in high school, every senior was required to take a course in personal finance,\u201d wrote Roth. \u201cBut now we\u2019re no better with money than those who were never given this sort of instruction.\u201d Abstract lessons about interest rates and profit margins often fail to show students how overspending can hurt them in real ways. And it doesn\u2019t address why they buy things. \u201cOur financial success isn\u2019t determined by how smart we are with numbers, but how well we\u2019re able to control our emotions \u2013\u2013our wants and desires,\u201d Roth pointed out. \u201cFor most of us the issue is internal: The problem is in us<\/em>. In other words, I<\/em> am the reason I can\u2019t get ahead.\u201d<\/p>\n Making matters worse, marketing keeps getting more clever and \u201ccreative.\u201d\u00a0 Advertisers long have recognized that selling is a visceral business. As Entrepreneur Magazine<\/em> recently put it, \u201cEffective Marketing Appeals to Emotions Instead of Reason.\u201d The magazine was quite explicit about how this works, telling businesses \u201cto acknowledge that selling a product is no longer enough. Now it\u2019s all about the experience you provide with it. This experience is dependent on your ability to trigger the right emotions, from the right audience, at the right time.\u201d[xvi]<\/a> The big three triggers are: establishing deeper value, alleviating psychological pain, and eliminating consumer regret. Acknowledgement of this came from Glamour Magazine,<\/em> a periodical usually thick with exactly such ads. In \u201cCreative Ways to Save Money,\u201d Glamour<\/em> told readers to be wary of feeling-laden ads and \u201cconsider leaving your credit card at home if you have a burning need to spend passionately.\u201d[xvii]<\/a><\/p>\n Also, money itself is growing increasingly abstract. As traditional boundaries between makers and consumers are loosening, individualized work-and-spend cycles become even stronger. Rarely recognizing the working of systematic beguilement, Americans instead blame themselves for any hardships in their lives. Set before them is a vision of purchasing as a form of liberation and self-expression. Tempered by a decade of fiscal insecurity, discretionary spending has taken over as a measure of personal freedom \u2013\u2013 often gently encouraged by the friendly suggestions of an Amazon algorithm. Beneath all of this, big data and computerized marketing keep refining a rising virtual economy in which material goods are increasingly rendered as electronic transactions. Online sales are but one example of the diminishing use of cash in an age in which finance has become more ephemeral and hard to grasp. Even bankers can get lost in a spirals of leveraged investments, credit default swaps, and other exotic instruments.<\/p>\n \u00a0<\/strong><\/p>\n Underlying America\u2019s financial literacy problem is the country\u2019s ambivalence about education. Even as schooling enhances upward mobility, many in the U.S. are wary of too much book-learning. Some of this comes from the anti-elitism baked into American identity, which associates pedantic superiority with aristocratic ways rejected centuries ago. Also, lots of people simply don\u2019t like being told what to think. They prefer to believe they are making up their own minds, even as they are falling for advertising pitches. Remember the \u201cknowledge illusion\u201d discussed in the last chapter? Americans in particular assume they know more than they do. And when it comes managing household finances, most consumers don\u2019t want any help \u2013\u2013 usually seeing money as a \u201cpersonal\u201d matter. After all, isn\u2019t this why so many voters revolted against health care reform? Perceived autonomy is one of consumerism\u2019s unspoken allures. Buying things provides a form of gratification that\u2019s just about the opposite of sitting at a school desk.<\/p>\n In his landmark 1964 book Anti-Intellectualism in American Life<\/em>, Richard Hofstadter linked these tendencies to worries about external control, along with latent insecurities about American prosperity. This partly explains why business leaders often react with such virulence to pedigreed \u201cexperts.\u201d As Hofstadter put it, \u201cThe plain sense of the common man, especially if tested in some demanding line of practical work, is an altogether adequate substitute for, if not actually much superior to, formal knowledge and expertise acquired in schools.\u201d[xviii]<\/a> America\u2019s ambivalence about schooling is even more pronounced toward higher education.\u00a0 These anti-intellectual instincts have been fed in recent years by a torrent of bad publicity over college tuitions, sex scandals, and a resurgent student protest movement. Quite recently, the Pew Research Center found a widening partisan divide, with only 40 percent of Republicans feeling good about higher education (down 15 percent from the prior year).[xix]<\/a> While Democrats remained positive at roughly 70 percent, overall public opinion has dropped to 55 percent. \u201cThe erosion of trust in heretofore respected institutions is a problem for the ivory tower,\u201d wrote Daniel Drezner in his book The Ideas Industry.[xx]<\/strong><\/a><\/em> \u201cAcademics attempting to weigh in on public affairs confront a delegitimizing assault on the academy \u2013\u2013 call it the \u2018War on College\u201d[xxi]<\/a> This has meant the fall of the academic \u201cpublic intellectual\u201d and the rising prominence of entrepreneurial \u201cthought leaders\u201d like Bill Gates, Guy Kawasaki, Neil Patel, and Zuckerberg.<\/p>\n The rise of the thought leader shows just how much Americans value practical knowledge and success stories. This isn\u2019t necessarily a bad thing, according to Drezner. In fact, it might help clarify what kinds of education work best in the U.S \u2013\u2013 especially in matters like financial literacy. Knowledge seems to catch on when it has a clear usefulness. \u201cOur brain has evolved to discard information that it thinks has irrelevance,” Tesla thought leader Elon Musk recently quipped.[xxii]<\/a> Others see such attitudes reflecting a broader pattern of neoliberal rationalization \u2013\u2013 in which practical utility becomes the measure of all things (especially when linked to money). Certainly the thought leader concept reinforces this. On the other hand, the common appeal of practical ideas may have a less partisan explanation \u2013\u2013 having more to do with immediate need and experience. Many consumer commodities are there for a purpose, after all. And customers don\u2019t always have a choice about whether to buy basic necessities like food, clothing, and other staples of life.<\/p>\n \u00a0<\/strong><\/p>\n This learning dynamic long has been recognized in educational circles, however. From the nineteenth century onward, successful teachers saw that students do best when they \u201clearn-by-doing\u201d and feel they have some control over the process.\u00a0 Memorized facts quickly get forgotten when lessons seem disconnected from practical usage. And rote learning also steals the fun of finding knowledge on one\u2019s own. These factors informed the Progressive Education movement and its core principle of student-centered learning. When students discover their own answers and see how knowledge can help them, the insights become more meaningful and longer lasting. This fundamental insight about hands-on cognition isn\u2019t only a premise of educational theory. For quite some time, employers have been seeing it in the workplace.<\/p>\n If you think about it, learning-by-doing has always been the basis of on-the-job training, internships, and trade apprenticeships. The learner first is shown a method and then asked to perform the task independently. Even today, medical students are familiar with what is termed the \u201cSee One, Do One, Teach One\u201d approach. In 1962, economist Kenneth J. Arrow wrote an often-cited paper entitled \u201cThe Economic Implications of Learning by Doing\u201d in which he declared that, \u201cOne empirical generalization is so clear that all schools of thought must accept it \u2026 Learning is the product of experience.\u201d[xxiii]<\/a>\u00a0 To Arrow, \u201cLearning can only take place through the attempt to solve a problem and therefore only takes place during activity.\u201d Going yet further, Arrow added that \u201cA second generalization that can be gleaned from many of the classic learning experiments is that learning associated with repetition of essentially the same problem is subject to sharply diminishing returns.\u201d[xxiv]<\/a><\/p>\n Arrow\u2019s learning-by-doing argument has several implications for the \u201ccrises\u201d in innovation and the creative industries discussed in the pages of this book. For one thing, Arrow argued the economic advantage<\/em> of experiment in moving knowledge forward and the economic disadvantage<\/em> of repetitive inclinations. Put another way, short-term gains deriving from already-known formulas ultimately provide less benefit than long-term research and problem solving. Even more importantly, Arrow\u2019s principles conformed with the self-motivated spirit of American capitalism and the country\u2019s anti-elitist attitudes toward learning. It argued that working for one\u2019s own gain and doing so in a practical way were compatible with both enhanced learning and societal benefit.<\/p>\n More recently, this same philosophy has been advanced by other well-known economists. In their book Creating a Learning Society<\/em>, Nobel Laureate Joseph E. Stiglitz and Bruce C. Greenwald put learning-by-doing in both historical and contemporary contexts.[xxv]<\/a>Stiglitz and Greenwald began by asserting an unequivocal link between new knowledge and economic growth, often tied to technological innovations. They stated that knowledge has proven far more effective than wealth in improving standards of living and allowing populations to thrive. Capitalism can do much to incentivize this process. But it also can get in the way because \u201cthe production of knowledge differs from other goods,\u201d Stiglitz and Greenwald explain. \u201cMarket economies alone typically do not produce and transmit knowledge efficiently. Closing knowledge gaps and helping laggards are central to growth and development.\u201d[xxvi]<\/a> Stiglitz and Greenwald got specific in stating that \u201cmany standard policy prescriptions, especially those associated with \u2018neoliberal\u2019 doctrines focusing on static resource allocations, have impeded learning.\u201d[xxvii]<\/a><\/p>\n \u00a0<\/strong><\/p>\n \u201cChanges in technology affect what and how we learn (and what and how we should <\/em>learn),\u201d Stiglitz and Greenwald added.[xxviii]<\/a> Some of this has come from computerization. After all, digital technologies have been rising for twenty years as a social force, and along with them all manner of new products and services. As business, education, entertainment, and finance migrated to online environments in the 1990s, the term \u201cinformation economy\u201d became the order of the day. A decade later smartphones shot the process forward as everything became digitally \u201csmart\u201d \u2013\u2013 from notebooks and televisions, to refrigerators and thermostats. Next, the \u201cinternet-of-things\u201d would designate the increasing interconnection of products. Eventually people were speaking of smart homes, cities, and entire nations as the concept of a \u201cknowledge economy\u201d took over. It\u2019s not rocket science to see the importance of learning in all of this. How else can the average person come to terms with the exploding infosphere?<\/p>\n [i]<\/a> Dan Kadiec, \u201cWhy We Want \u2013\u2013But Can\u2019t Have\u2013\u2013Personal Finance in Schools.\u201d Time<\/em> (Oct. 10, 2013) http:\/\/business.time.com\/2013\/10\/10\/why-we-want-but-cant-have-personal-finance-in-schools\/ (accessed Jul. 20, 2017).<\/p>\n [ii]<\/a> Thomas L. Harnisch, \u201cBoosting Financial Literacy in America,\u201d Perspective<\/em>s (Fall 2010) http:\/\/www.aascu.org\/uploadedFiles\/AASCU\/Content\/Root\/PolicyAndAdvocacy\/PolicyPublications\/AASCU_Perspectives_Boosting_Financial_Literacy(3).pdf (accessed Jul. 13, 2017).<\/p>\n [iii]<\/a> \u201cRecession Lesson.\u201d<\/p>\n [iv]<\/a> \u201cCreative Money Saving Tips,\u201d MoneyMatters (n.d.) https:\/\/www.listenmoneymatters.com\/money-saving-tips\/ (accessed Jul. 26, 2017).<\/p>\n [v]<\/a> Ravi Mehta and Meng Zhu, \u201cCreating When You Have Less: The Impact of Resource Scarcity on Product Use Creativity,\u201d Journal of Consumer Research<\/em> 42, no.5 (2016) https:\/\/academic.oup.com\/jcr\/article-abstract\/42\/5\/767\/1855952\/Creating-When-You-Have-Less-The-Impact-of-Resource?redirectedFrom=fulltext (accessed Jul. 26, 2017).<\/p>\n [vi]<\/a> \u201cCreating When You Have Less.\u201d<\/p>\n [vii]<\/a> Andrew Soergel, \u201cConsumers Ramp Up Borrowing as Outstanding Debt Hits $3.84T\u201d U.S. News and World Report<\/em> (Jan. 10 2017) https:\/\/www.usnews.com\/news\/economy\/articles\/2017-07-10\/consumers-ramp-up-borrowing-as-outstanding-debt-hits-484t (accessed Jul. 10, 2017).<\/p>\n [viii]<\/a> Michael Corkery and Stacy Cowley, \u201cHousehold Debt Makes a Comeback in the U.S.\u201d New York Times<\/em> (May 17, 2017) https:\/\/www.nytimes.com\/2017\/05\/17\/business\/dealbook\/household-debt-united-states.html (accessed Jul. 10, 2017).<\/p>\n [ix]<\/a> Rachel Gillette, \u201cA Quarter of American Families Go into Debt to Pay for Child Care,\u201d Business Insider<\/em> (Aug. 10, 2016) http:\/\/www.businessinsider.com\/a-quarter-of-american-families-go-into-debt-to-pay-for-child-care-and-the-cost-is-significantly-changing-the-way-people-do-their-jobs-2016-8 (accessed Jul. 19, 2017).<\/p>\n [x]<\/a>\u00a0 \u201cHousehold Debt Makes a Comeback.\u201d<\/p>\n [xi]<\/a> \u201cJust How Bad in America\u2019s Financial Literacy Problem? This Bad\u201d The Street<\/em> (Aug 1, 2016) https:\/\/www.thestreet.com\/story\/13660249\/1\/just-how-bad-is-america-rsquo-s-financial-literacy-problem-this-bad.html (accessed Jul 12, 2017).<\/p>\n [xii]<\/a> Kimberley Palmer, \u201c9 Money Strategies for the Creative Thinker,\u201d Money Magazine<\/em> (Nov. 2, 2011) https:\/\/money.usnews.com\/money\/personal-finance\/articles\/2011\/11\/02\/9-money-strategies-for-creative-thinkers (accessed Jul. 26, 2017).<\/p>\n [xiii]<\/a> Shelly Schwartz, \u201cUS Schools Get Failing Grade for Financial Literacy Education,\u201d CNBC<\/em> (Jan. 28, 2016) http:\/\/www.cnbc.com\/2016\/01\/28\/us-schools-get-failing-grade-for-financial-literacy-education.html (accessed Jul. 10, 2017).<\/p>\n [xiv]<\/a> Yasmine Ghahremani, \u201cCan Schools Really Teach Personal Finance?\u201d FOXNews<\/em> (Jan. 14, 2014) http:\/\/www.foxbusiness.com\/features\/2014\/01\/09\/why-johnny-cant-save-money-and-what-schools-should-do-about-it.html (accessed Jul. 10, 2017).<\/p>\n [xv]<\/a> J.D. Roth, \u201cWhy Financial Literacy Fails,\u201d GetRichSlowly<\/em> (Apr. 10, 2017) http:\/\/www.getrichslowly.org\/blog\/2011\/12\/07\/why-financial-literacy-fails-and-what-to-do-about-it\/ (accessed Jul. 14, 2017).<\/p>\n [xvi]<\/a> Jeremy Ellens, \u201cEffective Marketing Appeals to Emotions Instead of Reason,\u201d Entrepreneur<\/em> (Aug. 7, 2015) https:\/\/www.glamour.com\/story\/14-creative-ways-to-save-money-in-2017 (accessed Jul. 26, 2017).<\/p>\n [xvii]<\/a> Jillian Kramer, \u201c14 Creative Ways to Save Money in 2017,\u201d Glamour Magazine (Dec. 12, 2016) https:\/\/www.glamour.com\/story\/14-creative-ways-to-save-money-in-2017 (accessed Jul. 26, 2017).<\/p>\n [xviii]<\/a>Richard Hofstadter, Anti-intellectualism in American Life<\/em>, (New York: Vintage, 1996) p. 19.<\/p>\n [xix]<\/a> Daniel W. Drezner, \u201cThe War on College Continues to be Prosecuted on Multiple Fronts.\u201d Washington Post<\/em> (Jul. 11, 2017) https:\/\/www.washingtonpost.com\/news\/posteverything\/wp\/2017\/07\/11\/the-war-on-college-continues-to-be-prosecuted-on-multiple-fronts\/?utm_term=.cb325f7ebcd5 (accessed Jul. 12, 2017).<\/p>\n [xx]<\/a> Daniel W. Drezner, The Ideas Industry <\/em>(Oxford: Oxford, 2017).<\/p>\n [xxi]<\/a> \u201cThe War on College Continues.\u201d<\/p>\n [xxii]<\/a> Matt McFarland, \u201cElon Musk Explains What is Wrong with Math Class,\u201d CNN<\/em> (Jul. 19, 2017) http:\/\/money.cnn.com\/2017\/07\/19\/technology\/future\/elon-musk-dc\/index.html?iid=ob_homepage_tech_pool (accessed Jul 23, 2017).<\/p>\n [xxiii]<\/a> Kenneth Arrow, \u201cLearning by Doing,\u201d Review of Economic Studies<\/em> 29, no. 3 (Jun. 1962 1962): 155.<\/p>\n [xxiv]<\/a> Ibid.<\/p>\n [xxv]<\/a> Joseph E. Stiglitz and Bruce C. Greenwald, Creating a Learning Society<\/em>: A New Approach to Growth, Progress, and Social Development <\/em>(New York: Columbia, 2017).<\/p>\n [xxvi]<\/a> Creating a Learning Society<\/em>, p. 18.<\/p>\n [xxvii]<\/a> \u201cGuest Talk by Nobel Laureate Prof. Joseph E. Stiglitz on \u2018Creating a Learning Society,\u2019\u201d Centre for Information Technology and Public Policy (Jul. 5, 2016) http:\/\/citapp.iiitb.ac.in\/guest-talk-by-nobel-laureate-prof-joseph-e-stiglitz-on-creating-a-learning-society\/ (accessed Jul. 14, 2017).<\/p>\n