Thank you Mr. Chairman for convening this first hearing on the state of financial literacy and education. I welcome Secretary O'Neill, Chairman Greenspan, and Chairman Pitt to this morning's hearing. I look forward to your views on this important subject. I also eagerly anticipate tomorrow's hearing where we will hear from seven witnesses from organizations working in the field of financial literacy and education.
Mr. Chairman, I became actively involved in this issue in 1999, after reading an article in Parade Magazine featuring the study on financial literacy conducted by the National Council on Economic Education. The disturbing results of that study caught my attention. In a basic economics test, half of the adults and two-thirds of the high school students received failing scores. More than half of the students and adults did not have a basic understanding of economic concepts such as money, interest rates, and inflation. Also, a majority of the adults and students did not know that a budget deficit occurs when the federal government's expenditures exceed its revenue for the year. After reviewing these test results, I investigated further the lack of financial literacy in our society.
Americans of all ages and backgrounds face increasingly complex financial decisions as members of the nation's workforce, managers of their families' resources, and voting citizens. Many find these decisions confusing and frustrating because they lack the tools necessary that would enable them to make wise, personal choices about their finances.
Increased education about basic economic concepts will help people to make better financial decisions and increase opportunities for participation in today's global economy. All citizens need to be prepared, starting from youth, to make informed decisions regarding fundamental undertakings such as purchasing a first home, financing a college education, and saving for a comfortable retirement. Arming citizens with basic economic knowledge and the ability to find the specialized information they need has the potential to increase the chance that citizens can realize their financial goals. According to Mr. Lewis Mandell, dean of the State University of New York at Buffalo, if we fail to provide children with a sound understanding of personal finance, we can expect them as adults to make financial missteps, misjudgments, and errors which can lead to poor retirement planning, clumsy investing, debilitating debt, and even bankruptcy.
Increasing the financial literacy of citizens can provide numerous benefits. For example, a greater understanding and familiarity with financial markets and institutions will lead to increased economic activity and growth. A greater citizen awareness of economic issues will lead to expanded participation in our political system. Most importantly, financial literacy empowers individuals to make wise financial decisions and reduce the confusion of an increasingly complex economic society.
The reauthorization of the Elementary and Secondary Education Act included the Excellence in Economic Education Act as an amendment, which I introduced along with my colleagues Senator Corzine and Senator Enzi. This legislation will significantly improve the knowledge of fundamental, yet critical, economic principles among our country's young people. The measure aims to increase student knowledge of, and achievement in economics by providing our nation's teachers with the tools to enhance teaching methods of economics. The legislation authorizes funding for teacher training programs and increased resources to states for the purpose of incorporating economics into the K-12 curricula. This legislation encourages economics-related research and development, dissemination of instructional materials, and replication of best practices and programs. It also increases private and public support for economic education partnerships between schools and local businesses and private industry.
I was also pleased to support another financial literacy amendment sponsored by Senator Corzine that was also included in the legislation. Today's hearing is the beginning of a national dialogue on financial literacy and education. I applaud the efforts of Secretary O'Neill, Chairman Greenspan, and Chairman Pitt to bring attention to this issue, and I look forward to your recommendations on how to increase financial literacy.
Again, I want to thank you, Mr. Chairman, for convening these hearings on financial literacy.