“The Business of You,” Personal Finance for Teenagers: An Interview with Chris Surprenant

The following is an interview conducted by Archbridge fellow and Profectus co-editor Justin Callais with Chris Surprenant, professor of ethics, strategy, and public policy at the University of New Orleans. We discuss his research on high school financial education programs, supported by a grant from the John Templeton Foundation.

Justin Callais: You received a $2 million grant from the John Templeton Foundation to lead a research project on high school financial literacy programs. Can you tell us a bit about the project and what inspired it?

Chris Surprenant: Over the past few years, state legislatures throughout the United States have been passing laws that require high school students to complete courses in personal finance in order to graduate from high school. All of these laws are being passed with good intentions: We see many people in our community who lack the relevant knowledge and skills related to personal finance, and it would be better for those individuals and for the community as a whole if this gap wasn’t there. The problem is that there’s almost no research into the efficacy of financial education courses, including which approaches to teaching this material make it more likely for students to acquire the relevant knowledge and skills over the short-term, and then retain and be able to apply this knowledge or use these skills over the long-term. That’s where we come in.

Some background here is important, because the usual question I get asked is why and how did someone with a degree in philosophy get $2M for a project examining the efficacy of high school financial education courses? And that’s a fair question.

In 2016, I was working on a variety of topics connected to ethics and the criminal justice system, including how financial incentives had driven many of the problems that we see with criminal justice in the United States. As part of this project, I was able to connect with economists at a few historically black colleges and universities throughout our region. During a dinner with Dr. Gregory Price, formerly a professor of economics at Morehouse and now one of my colleagues at UNO, I was listening to him talk about the problem of crime in many black communities, and he thought solutions needed to center around financial opportunity and entrepreneurship. Out of this discussion came a proposal to the John Templeton Foundation for a 3-year project that would aim to better understand the barriers to minority entrepreneurship in cities throughout the southeastern US.

The project was funded and we started in fall 2019. In spring 2020, the COVID-19 pandemic shut down the world in various ways, but most of the people we were working with still needed to generate income to support themselves and their families. Beyond that, even more people in these communities turned to entrepreneurship as a way to make ends meet during this time. This gave us an even greater chance to better understand what business opportunities they saw around them and the barriers they faced in starting and growing those businesses.

One thing that came out of this project was we learned that very few people in the communities we were serving had a good grasp of the knowledge and skills related to personal finance. Even for high school students who had supposedly taken a course in personal finance as part of a graduation requirement, few retained much of what they had been taught (or were supposed to have been taught). However, there was one exception: the entrepreneurs.

It seemed as if people who had started and were operating businesses acquired and retained the relevant knowledge and skills connected to personal finance better than the people who were not operating businesses. That’s not especially surprising. But what we also found was that it seemed like they acquired the relevant knowledge and skills through the process of starting and operating their business, instead of possessing that knowledge and those skills first, and then deciding to start and operate a business as a result. If true, that’s a really important piece to understanding how financial education should be taught and why so little of what is being taught now is being retained.

But we needed to find out if that was true, and our 3-year project in 2019 wasn’t set up to test that. So we went back to Templeton, identified this observation as one of the more significant possible outcomes of this work, and proposed a new 3-year project focusing on better understanding the efficacy of high school financial education programs and how teaching financial education in high schools could be more impactful. They agreed to fund this project, and we began work in fall 2023.

Justin: Taking a step back, what is financial education, and why do you believe it’s important, especially for high school students? 

Chris: I think it’s fair to say that someone is educated financially when they have the knowledge and skills associated with making real-world financial decisions and know how to apply this knowledge and use these skills on a daily basis. This is pretty broad, but I see financial education as being connected to where someone is in life and the financial decisions they’re likely to encounter. So, for example, for our high school students, this means it’s less about knowing the difference between Roth and non-Roth retirement accounts, and more about how to read their pay stub, how loans work and if they should be taking them out to attend college, and how to track their monthly income and expenses.

Let me be very specific for a moment with our high school students. All of them are facing a life-altering financial question almost immediately after graduating high school: Do I go to college? If so, where should I go? The questions related to college can have a profound impact on the rest of their life, especially if they choose to go to a school they cannot pay for without taking on a significant amount of debt. What compounds the challenges related to this decision is that almost everyone around them is incentivized to give them advice that is contrary to their interests. For example, high schools not only benefit from students choosing to go to college (even if going to college right out of high school is not the best decision for them), high schools benefit from their students going to the “best” schools they get into. But it’s not just high schools; society as a whole pressures them not only to attend college, but to attend the most prestigious school they can, even if they can’t afford it.

For many students, going to college right after high school is the best decision. But almost no students benefit from going to a college they can’t afford. A financially educated high school student is someone who has thought through the college decision and how it will impact his or her life, including from the standpoint of personal finances. They understand how debt works, have thought through the value of the degree, have considered the social benefits of attending the various schools they’ve gotten into, and make an informed decision based on as much relevant information as they can get access to.

The financially educated high school student approaches all of their decisions in this way. Should I buy this car? What are all of the costs associated with this purchase? What are the benefits? Being financially educated doesn’t mean being cheap or frugal, but rather that they understand the value of money and that in our society nearly everyone around them is trying to sell them something. If they start to see the world in that way, and also have the knowledge and skills needed to navigate and be successful in that world, we think we’ve accomplished the goal of financial education at the high school level.

Justin: When I think of education more broadly, I think of “filling in the gaps” of knowledge not typically learned in the home. With this approach, do you find that financial literacy classes are especially impactful in areas with more broken homes/split families?

Chris: One thing we’ve seen is that when it comes to real-world financial education, we’ve yet to find a clear pattern in terms of knowing in advance who possesses the relevant knowledge and skills. You might think that if you find a student whose parents both went to college, or one who owns their own business, then you might expect the kids to be above average when you look at their financial skills. And that’s simply not the case, or at least we haven’t seen that yet.

While we haven’t seen any obvious patterns based on family structure, we have seen that presenting material in certain ways can be more or less effective based on the background of the students. Who is presenting the material also matters. This is our challenge now: Figuring out how best (and who best!) to present the material based on the background and interests of the students in the class.

Justin: You have previously said that potential entrepreneurs often struggle to make the jump from a “side hustle” to full-time employment. What barriers get in their way, and how does financial literacy play a role?

Chris: Lack of the relevant financial knowledge and skills usually isn’t the problem. Most of the people we work with are necessity entrepreneurs—entrepreneurship is necessary for them in order to pay their bills, whether by supplementing the income from a regular job or as their sole source of income. For the people with “side hustles,” there are two things that prevent them from making significantly more money doing whatever they’re doing. First, and most obviously, for whatever they’re doing, they’re at or near capacity. Either they can’t produce more of what they’re making, or they can’t expand their market to sell more. We work with quite a few people who make food in their kitchen at home and then drive to construction sites around the city to sell their food. They can’t make more food—they’ve reached the capacity of their home kitchen.

The second issue preventing them from growing their business is the answer to, “If they’re so successful, why not rent a commercial kitchen and produce more?” That’s not realistic. Set aside the challenges of acquiring the capital to do that. Operating an above-the-table business requires having the appropriate licenses and insurance, paying taxes, and declaring income in a way that will prevent many of these people from receiving government benefits. The potential loss of benefits weighs heavily on this decision.

If the benefits you’re receiving are worth $20k a year, you’ll need to earn at least $30k more per year just to break even. Take someone who may be making $25k per year under the table selling food. Because the work is under the table, not only are they not paying taxes on that income, most are receiving significant government benefits—Section 8 housing vouchers, food assistance, and Medicaid are the most obvious. For many of the people we’ve worked with, it would be almost impossible for them to replace these benefits and the lost money due to taxes within a year to allow them to breakeven. Most would never be able to do this. Why take that risk? The other set of risks that come with operating under the table is far lower.

Justin: What is unique about your financial literacy program? Why do you believe it’s more effective than other approaches?

Chris: The approach we’re taking is unique, because we’re trying to teach financial education through the lens of entrepreneurship. At this point, we do not know whether or not it will be more effective than other approaches—that’s what we’re trying to test. Based on what we’ve observed, we think that the knowledge and skills we associate with financial education are better acquired and retained through participating in entrepreneurial activity. We’re trying to understand if this is true, and, if so, why it is true. But even if we determine that it is true, the challenge after that is how do we replicate this in a high school class.

So far, we’ve tried classes where we’ve compelled all of the students to start businesses. We’ve given them the resources needed to start those business and centered the class around starting and operating a business. That hasn’t been successful thus far. The students who were already engaged in some form of entrepreneurial activity before the class began (which has been about half) have shown significant improvement, but it hasn’t been long enough to determine retention. But for students who were not already engaged in entrepreneurial activity before the class, it has been very difficult to get them to engage in this way, and we’ve seen no noticeable gains among these students as compared to the students in more traditional courses. (Again, it’s important to note that we’re still in year 1 of a three-year project, and we’re still in the process of collecting data. Our sample size is relatively small right now.)

One concern that has come up is whether or not you achieve positive educational outcomes by compelling students who are neutral towards (or disinterested in) entrepreneurship to participate in entrepreneurial activity. Assume for a second we find that students learn the material better by participating in entrepreneurial activity, but we also find that it’s not possible to get these outcomes by compelling students to be entrepreneurs. Is it possible that there’s a proxy for starting and operating a business? One of the things we’re testing here we’ve informally called “The Business of You.” Instead of having the students start and operate their own business, what if they thought of themselves as a business? Nearly all of our students have income—it may come from entrepreneurship, a more traditional job, an allowance from their parents, or some combination of these things—and nearly all of our students have expenses. Some of these expenses are recurring, such as the students who have to pay their own cell phone bill or car insurance, and some of these expenses are one-off, such as concert tickets or going out to eat. Is it possible to generate the positive educational outcomes by trying to create within the students the mindset that they are the CEOs of themselves? That’s one of the things we’re looking at now.

Justin: What does success look like for this project, and how will you measure it?

Chris: Success looks like better understanding (1) what schools are teaching right now in their financial education courses, (2) how what is being taught now connects to the education mandates in these states, (3) how effective existing courses are at helping students acquire the relevant knowledge and skills, (4) if there are more effective ways to teach this material, and, if so, (5) how can we reasonably set up high school financial education curricula to realize better educational outcomes given the limited resources most schools are working with. (3), (4), and (5) are the most challenging.

Educational outcomes are incredibly difficult to measure generally, never mind if we’re interested in looking at retention and the ability to apply material to real-world situations over time. Here, I stress “over time.” The biggest challenge in measuring the success of any educational program is long-term impact. For this project, we have a plan in place to try to overcome these challenges by setting up the study in a way that will allow us to determine knowledge retention among program students 9-12 months after the program ends, but we’ll still be at the mercy of the students responding to our queries. We have ways of incentivizing their participation that we think should work, but, again, you never know what’s going to happen until you try to collect the data.

Chris W. Surprenant
Chris W. Surprenant
Chris W. Surprenant, PhD, is a professor of ethics, strategy, and public policy at the University of New Orleans, where he directs the Urban Entrepreneurship and Policy Institute. His work focuses on current issues in ethics and public policy, including the connection between entrepreneurship and human well-being; the importance of free exchange to the proper functioning of a free society, both in academic institutions and the community as a whole; and the role of financial incentives in shaping institutions and influencing public policy. He received his PhD in philosophy from Boston University. From 2023-2026, he is leading a project to examine the efficacy of high school financial education programs, which is supported by a grant from the John Templeton Foundation.