Monday, June 26, 2006

Teaching about Money and Payments

Whether you teach personal finance, consumer economics, or a more traditional economics course, here is an article that I found quite interesting.

Loretta Mester of the Federal Reserve Bank of Philadelphia has an article in the Business Review about Changes in the Use of Electronic Payments.

I think you will find this interesting (although I doubt you'll find it surprising) because of the tables that show who uses which forms of electronic payments. The data is sorted by age, income, and education. It looks at ATM usage, debit and smart card usage, direct deposit and bill payment, and other aspects of banking. The patterns are about what one would expect. Younger people use ATM and debit cards more than their elders. Older people use direct deposit and bill pay more than younger people. And the relationship of use to income and education are pretty direct. The higher income and more education one is, the more likely to use these methods of payment.

I hope all teachers would find something of interest here when they discuss the concept of money. The definition of money as "medium of exchange" is changing to something very abstract. This data would seem to indicate that we depend on more tactile forms of money, e.g. currency, coin, checks (especially checks) less and less. It would seem that it is more and more important for our students to understand the importance of keeping track of their spending and how they handle their finances in a world where the idea of money may be more and more abstract.

Let me know what you think, both of this post and the data.

Posted by TSchilling at June 26, 2006 5:34 PM

I wonder if people distinguish between debit and credit cards. Considering the only time I ever used a debit card was when I mistook it for a credit card, they probably distinguish them, but not necessarily as banks do.

Posted by: Lord at June 26, 2006 7:11 PM

I think you raise an interesting point. I know I definitely distinguish between them. There are certain transactions that are always debit, others that are always credit. There are very, very few that I will use either at different times.

I wonder what other people do. Any feedback here?

Posted by: Tim at June 26, 2006 7:18 PM

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