Cookie Monsters

The most recent meeting of the Get Cheddar Club focused on the Marshmallow Experiment. The experiment first started at Stanford University in the 1960s. Over the years, Dr. Walter Mischel, the experiment's founder and Stanford psychology professor, followed those who participated in the experiment and either successfully waited for the second marshmallow or who caved and ate the first.

Mischel found that those who waited for the second marshmallow did better in school and were better stewards of their finances among other positive attributes. Mischel also found that those who could not wait for the second marshmallow and simply ate the one in front of them did worse in school and that they became poorer caretakers of their money over time.

A lot has been written about the experiment over the years for better or for worse. A 2010 WNYC report called it a greater predictor of future behavior and success than any standardized test. Others have shot holes in it claiming the ability to delay gratification is as much about nurture as nature.

In 2012, New York Times investigative reporter Charles Duhigg published The Power of Habit: Why We Do What We Do in Life and Business. While Duhigg goes on to cite studies that liken willpower to a muscle that can tire after repeated use, I latched on to the successful habit of the children who passed the marshmallow test. When faced with temptation, they knew how to distract themselves. The least I can do for my students is to introduce them to this good habit.

It's easy to tell kids and people to wait for the second marshmallow, but it's rarely that easy to see through.

Putting the Get Cheddar Club through the marshmallow experiment was a fascinating chance to observe human nature first hand.

In front of each student I placed a Famous Amos chocolate chip cookie. I then asked if they wanted two cookies. The class resoundingly said yes. Then the bad news: They could not have the second cookie till Ms. Hannah, my assistant, returned. If they ate the cookie before them, no second cookie. They moaned.

How long will Ms Hannah be away? they asked.

I don't know, I said. It could be five minutes, it could be fifteen.

They groaned.

For good measure I put a cookie in front of myself as well. The kids got a kick out of that. Ms. Hannah then left the room.

Some kids quickly pushed the cookie away from them. Others covered the cookie up with pieces of paper on their desk. A few averted their eyes or hid the cookie from view behind fingers.

Fortunately for them, I couldn't afford to spend 15 minutes of class waiting for someone to crack. So I gave in and devoured my cookie. When Hannah returned she gave me the hairy eyeball and asked me why I did it.

I just couldn't take it anymore, I said. That I felt the room getting hotter. That I couldn't take the pressure of such sweet temptation right before me. That I could not think of anything else.

I then took the kids outside where we worked on a new song and dance routine and played on the playground. Halfway through I asked them, are you thinking about the cookie?

No! they shouted as they played on the swings or slid down the slide.

We then discussed ways to avoid temptation such as going for a walk, reading a book, and playing.

Eventually a kid asked me, what does this have to do with money?

I then drew a parallel between sparing your first cookie to earn a second with putting a dollar in a savings account and waiting for it to become two.

I was proud of the kids' ability to distract themselves from cookie temptation, but know if they had been alone for a longer period of time the results may have been different. Hopefully they'll learn from my acting job rather than make the mistake themselves down the road.

Monsters & Externalities

In economics, an externality is a secondary or unintended consequence. Pollution is the classic example. People build a factory that will employ many and up the area's tax base. Pollution from the factory or the traffic it will bring are externalities.

As a teacher of financial education, I ran into my first in-class externality the other day. To give kids a better feel for the weight of debt and how it can limit one's movements, I started giving out golf balls to kids who fell behind in "paying their bills", i.e., bringing in pieces of paper from the previous class. This time a handful of students deserved four golf balls. Those who had paid all their bills deserved zero golf balls.

The externalities immediately followed.

First, kids who received golf balls accepted them as gifts, not punishments. They bounced the balls, they rolled them, they had a grand old time with them.

Second, the kids who did not receive golf balls wondered why they were being punished. They wanted fun and bouncy golf balls to play with. I couldn't blame them.

Long story short, golf balls are out. I have nine days to come up with a more appropriate alternative.

The rest of the class was a hodgepodge of highs and lows. The kids did an excellent job of remembering the first two songs and dances we had come up with weeks before, but then struggled to get through this week's despite enjoying acting like Big Scary Number monsters. The lyric "crazy scary" especially eluded them. In the end they pulled it together for a spirited on-camera performance.

Parents will attend next class. This gives us an opportunity to show off what the kids have learned and to expose the parents to our version of the Marshmallow Test...the Cupcake Test.

The Big Scary Number

Have you ever heard of a monster that grows exponentially when it isn't fed? Of a monster that towers over its victims, terrorizing them day and night so they can't sleep till their hair falls out and they become crazed?

With Halloween coming up, this is a good time to introduce kids to the idea of debt, specifically debt from credit cards and payday loans or overnight lenders. Accumulating debt is a monster, a Big Scary Number monster. Credit card companies can charge up to 25% in interest; payday loans or overnight lenders charge up to 650%. Scary numbers indeed.

Credit cards have a Jekyll and Hyde nature. They can be good, but they also have a dark side. Credit cards can cover short-term costs, but if those costs aren't covered immediately and in full they can double in a few months.

Payday loans and overnight lenders are a whole other breed of monster. People who seek to put out fires right before them and have no other alternatives often turn to these loans to extinguish kitchen fire-sized conflagrations only to set their whole homes ablaze.

How will I present these monsters to my class of six to nine year olds? Putting ballooning financial figures on a board is big, but it isn't scary. Monsters are big and scary. To address this, I'll speak their language. People like to tell kids how fast they are growing. Well, debt grows exponentially faster than kids. A foot tall overnight loan monster is 6'6" by the next paycheck. After that, the monster grows to 42 feet tall before exploding to 253' tall. The Incredible Hulk has nothing on the Big Scary Number.

Worse, these growing monsters not only wreck wallets and credit scores, they wear people down through financial stress. Financial stress impacts both physical and mental health. According to the American Psychological Association, 53% of respondents reported fatigue, 60% feelings of irritability or anger, and 52% lying awake at night in 2008. People also noted symptoms of lack of motivation, feeling depressed or sad, headaches and muscular tension. Physically,

Almost half of Americans (48 percent) reported overeating or eating unhealthy foods to manage stress, while one in four skipped a meal in the last month because of stress. Women were more likely than men to report unhealthy behaviors to manage stress like eating poorly (56 versus 40 percent), shopping (25 versus 11 percent), or napping (43 versus 32 percent). Almost one-fifth of Americans report drinking alcohol to manage their stress (18 percent), and 16 percent report smoking.

Hopefully, I can introduce the kids to this monster before it creeps up on them later in life.

Of Golf Balls, Budgets & Failure

"Is it easy to dance with your pockets full of golf balls?"

I asked that question to those in the Get Cheddar Club who had forgotten to bring in their "bills" from last class. They had just fallen behind their classmates in building up their credit scores and were given their first feel of debt.

They shook their heads.

"Are the golf balls heavy or light?"

"Light!" they answered.

"That's true," I responded. "But if you keep forgetting to pay your bills I will keep giving you golf balls."

Needless to say, there are no golfers in the class.

"Is it easy to dance with your pockets full of golf balls?"

"And that's what debt feels like. It holds you down. It feels heavy. It makes you feel like you can't do things." Yeah, I keep this class real light.

We then transitioned to the topic of the day: budgets.

I asked them what their parents spent money on. The kids hit six or seven of the eight areas I wanted to address including:

-rent/mortgage
-food
-health (insurance)
-communications (phones, internet)
-transportation (car, bus, etc)
-entertainment

I supplemented their responses with savings and credit cards. One little girl did a nice job of explaining why savings was important in the short-term. I followed her general point up with a specific example.

"How many of your parents have had car problems in the last month?"

Half the class raised their hands.

"Didn't expect that to happen, did you?"

They all shook their heads.

"What about trips to the doctor? Or a relative unexpectedly staying with you for a while? Are these unexpected events free?"

"No!"

We then tied together the expenses affiliated with a budget back into credit scores with the verse:

Pay comes in,

Bills go out.

Keep the lights on

rock 850 out!

Lastly, we've started a tally to chart their credit scores - for better or for worse. I want these kids to see how they are doing the same way they can feel debt weigh them down. If they hit 850, awesome. If they come in at 450, so be it. I would rather see them fail now than later when it's a question of real money.

At the end of the class a teacher told me there was little chance that they would remember to bring in their pieces of paper in two weeks; that they should leave them in the classroom for next time. I thanked her for her suggestion and I declined. That's not how the real world works. The point is for them to remember and to be rewarded for remembering; that's what credit rating agencies do. Sure, automatic bill pay exists, but I'd rather make it hard on them now so the alternative looks easy later.

The Get Cheddar Club will next work on The Big Scary Number, debt, how it grows exponentially and how to avoid its long, dark shadow.