Economic illiteracy

WHICH INVESTMENT has the greatest risk of losing its value due to inflation?

A) money market funds?

B) stocks?

C) putting cash in your mattress?

Not too long ago, more than 5,000 American adults and high-school students were asked this and 23 other economics and personal-finance questions by a leading national pollster.

The bad news: Only 28 percent of all students and 52 percent of all adults identified the riskiest investment, putting cash in your mattress.

The really bad news: 60 percent of the high-school students and almost one in three in adults earned an overall "F" on the fairly simple multiple-choice quiz.

Encouragingly, students' economic literacy seems to have improved some since 1999, when the last such test was sponsored by the National Council on Economic Education - with 21 percent now getting an "A" or "B" on the test vs. just 11 percent back then.

But even so, the test strongly suggests that Americans aren't close to being prepared to handle the so-called ownership society into which this nation is rapidly evolving - a society in which they're expected to independently save and invest for their own futures without the safety nets of corporate-funded pensions or expanding Social Security benefits.

It's not as though Americans don't value this knowledge: Virtually every adult and student tested said it's important to understand economics.

But only 50 percent of the students reported having been taught the subject in high school - and that's down from 59 percent in 1999. And a good deal of this instruction appears not to take place until the last year of high school.

Whether they go right to work or attend college, these students will quickly confront one of life's double-edged swords: A good deal of their future financial well-being will depend on not only how much they earn, but, increasingly, how well they manage those earnings.

Much more education in the ways of money is needed. We're not even talking about requiring full-blown Economics 101, so much as providing Americans with the owner's manual for the ownership society.