Teen angst is likely as old as the concept of a teenager, and in modern days has kept afloat plenty of industries: parenting books, Hot Topic, screamo and studded things. It’s an important stage in one’s adolescence, to hate everything in society that prevents you, a 16-year-old, from really achieving what you think you’re capable of: borrowing the car, staying out past midnight, etc. A recent study from the University of Arizona suggests that teen angst is finding a target in a somewhat unlikely place: Wall Street.
A study conducted by Michael Staten, a University of Arizona economist, sought not only to understand what young people know about personal finance, but also how they feel about it. The results were striking, according to a story by Staten in American Banker.
“It appears young people’s opinions about the financial system have been shaped by the constant drumbeat of negative stereotypes and criticisms so dominant in the public discourse during and since the crash,” writes Staten. The result is that a “healthy skepticism about financial institutions has soured into cynicism.” Well, perhaps. Or maybe the teenagers, however poorly informed, are sort of right.
Polling 878 students at 18 different high schools in 11 different states, Staten found the following:
- “60 percent of student polled firmly believe that credit card companies often entice people into taking on more debt than they can handle”
- “70 percent believe that businesses try to ‘trick’ young people into spending more than they should”
- “25 percent of students disagreed with the statement, ‘the stock market is rigged mostly to benefit greedy Wall Street bankers'”
- “17 percent disagreed with the statement, ‘banks are mostly interested in getting my money through hidden fees.'”
And aside from not trusting banks, teens don’t seem to know much about them or how they work, says Staten. They don’t understand that government bonds are less risky than stocks, they don’t understand that credit unions are not-for-profit and typically have lower fees than banks, and they don’t understand how credit scores work. Maybe it’s because there are very few states that require financial education in high schools.
Staten believes that these gaps in knowledge and bad attitude toward financial service providers “could push a generation of consumers away from mainstream institutions and toward risky alternative service providers or toward simple inaction, which has its own perils.”
He’s probably right, but that might not be such a bad thing. Staten, in his piece, seems to indicate that the media have been unfair to financial institutions since the crisis, and this is what’s giving teens such foul attitudes, but that hardly seems to be the case. Haven’t banks earned teens’ scorn? What do you think they hear at the dinner table? The LIBOR scandal has to be the last nail in the coffin to the notion that bankers aren’t willing to behave unethically in pursuit of a buck, regardless of the wider consequences of their actions. It wouldn’t be new for high schoolers to have a rabid disdain for authority, but at least in this case the authority in question is more potentially destructive to society than, say, the principal’s no-off-campus-lunch policy.
Furthermore, the more people move into less extortionate alternative financial services, the more mainstream they become. This is how the market for consumer goods works. Prepaid cards have gone from laughable celebrity-sponsored ripoffs to big bank-endorsed, high-quality accounts in a few short years. They help young people not get credit cards — the teens are right about this, credit card companies need you in debt to make money! — and not spend too much money on things they do not need. The financial system that collapsed in 2008 was built around mountains of unsustainable consumer debt. That young people are moving away from credit cards toward prepaid is a good thing — maybe not for big-box retailers, or any retailers for that matter — but for Americans’ long-term financial well-being.