Abstract
This chapter is about how to teach teachers to teach finance. It considers whether the teaching of financial literacy can emulate the pedagogical approach of Luca Pacioli, the ‘father’ of double entry bookkeeping. The first section is introductory, characterizing financial literacy and identifying key heuristic considerations. The second section (Parts 2 and 3)—a proposed curriculum—is in effect a two-part model (content and transmission). The third section suggests multiple case studies as a framework for evaluating pilot cases of its novel approach.
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Notes
- 1.
In Great Britain, for example, financial literacy has been embedded in the literacy and numeracy framework of Welsh school curricula since 2008. From September 2014 it became compulsory in England.
- 2.
Professor of history and accounting at the University of Southern California, and author of “The Reckoning: Financial Accountability and the Rise and Fall of Nations,” Basic Books, New York 2014.
- 3.
- 4.
Lusardi et al. (2014).
- 5.
Today’s pension funds dwarf the needs of the real economy, creating and sustaining instability by over-capitalizing real estate, which is then used as collateral for borrowing levels that income alone cannot support. According to Swiss government statistics, there is nearly seven times more money in that country’s pensions funds than its economy could absorb. (Social Security Report 554-1100, Neuchatel 2013.).
- 6.
As used in this paper, double entry bookkeeping is in fact shorthand for the process that opens single entries out into a more complex world before closing them again into a trial balance sheet.
- 7.
Luca Pacioli was a Franciscan friar and author of Summa de Arithmetica Geometria Proportioni et Proportionalità (A Compendium of Arithmetic, Geometry, Proportion and Proportionality) published in 1494. Reprinted by Scholars Book Co., University of Virginia, 1974 [1494].
- 8.
For example, Mishkin (2010).
- 9.
Soros (2014). Also, Soros (1994 [1987]).
- 10.
- 11.
In practice, the same or similar content and format is likely to be needed for both teachers and students.
- 12.
It is normal today when buying something with a credit card, for example, that one is taken through a checklist of things one should know about how finance works. Typically, however, the vendor has no idea what he is showing to his customer, who for his part usually signs with equivalent ignorance.
- 13.
For example, for many years the Bank of England has run a Monetary Policy Committee competition for 18 year olds that teaches by engaging. The main exhibit of the Bank’s Museum likens financial events to storms at sea, as if they were natural events before which we are helpless, when they are of course of our own making and subject to modifiable behaviour.
- 14.
We use the idea of a rising age to ground education in a picture of human development that encompasses different curricular concepts.
- 15.
For a fascinating treatment of this topic, see Zarlenga’s (2002).
- 16.
Quoted from a recent (18 January 2014) panel discussion by experts on BBC Radio 4 concerning financial literacy in schools, which stressed the danger of teaching technique without ethics. It also warned against treating money as a source of value rather than as a means of exchange.
- 17.
In a presentation on ‘Monetary standards and the value of money: Anglo-British experience from the 12th to the twentyfirst century’ made to London’s Monetary History Group on 20 April 2012, Anthony Hotson, an experienced financial director and academic, said a return to rent-based property capitalization was the only way to put a ‘floor’ back into the economy.
- 18.
Geijsbeek (2010 [1914]).
- 19.
‘Luca Pacioli, The Father of Accounting Education’, a paper presented at the 22nd Annual Accounting, Business and Financial History Conference, Cardiff 6th and 7th September 2010 Sangster and Scataglini (2010). Alan Sangster is at Middlesex University Business School, London; Giovanna Scataglini at Balliol College, Oxford.
- 20.
Teacher competence is a subtle affair that this paper does not discuss directly. It relies instead on the assumption that those who teach finance are competent teachers, but that their competence will be enhanced or confirmed if what they have to teach is self-supporting, self-evident.
- 21.
- 22.
Attendees at a workshop given by the writer, part of the 60th anniversary conference of UNESCO in Germany held in Karlsruhe, 25–28 September 2013. Written up, but not published, as ‘Wrongly Thought; Wrongly Wrought—Teaching Financial Literacy. A Case Study: UNESCO Project Schools in Germany.
- 23.
For example, UN-supported Child and Youth Finance International, based in Amsterdam, begins with Grade 1.
- 24.
Future of Finance (2013).
- 25.
Min Lee (PlayMoolah), Jeroo Billimoria (Child and Youth Finance International), Lisa Halpern (Kiboo), Sharan Jaswal (MyBnk) and Maggie Philbin (TeenTech) comprised the concluding session which considered “the real future of finance”, children and young people. They discussed how can we empower young people to manage their money responsibly, what is being done to educate children on financial management, and how can we enhance financial literacy in schools?
- 26.
See Klamer and McCloskey(1992), a view recently confirmed by Professor McCloskey directly. See also the well-known conversation between Sir John Hicks and Arjo Klamer just before Hicks died in 1989 that ended: “…projected balance sheets [are] the rational way to make a business decision. A lot of these mathematical models, including some of my own, are really terribly much in the air…’ Klamer (1989).
- 27.
For a trenchant critique of this situation as regards the accounting profession, see Cheffers and Pakaluk (2007).
- 28.
See, for example, Gleeson-White (2012).
- 29.
It is worth noting that the first three of these steps match Sangster’s earlier-mentioned description of Luca Pacioli’s teaching approach, suggesting that that approach is born of the accounting method, not out of a priori or arbitrary considerations.
- 30.
In passing, it may also well be the case that those who wish to learn how to teach finance may need the same kind of extra-curricular interest evinced by the UNESCO teachers, who find ways out of their enthusiasm to include UNESCO’s aims in their normal syllabus.
- 31.
Keynes (1923), p. 89.
- 32.
In a letter to Roy Harrod, 10 July 1938.
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Houghton Budd, C. (2016). In the Shoes of Luca Pacioli—Double Entry Bookkeeping and Financial Literacy. In: Aprea, C., et al. International Handbook of Financial Literacy. Springer, Singapore. https://doi.org/10.1007/978-981-10-0360-8_39
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