Take a look at the picture on the right. How much does one box of popcorn cost?
The correct answer, for this particular box, is $1.50. However it is not obvious that "two for $3" implies "one for $1.50". In other contexts, customers must make a minimum purchase to obtain a lower per-unit price. For example, if a shoe store has a "buy one pair, get a second pair free" sale, the customer who buys just one pair of shoes pays full price.
The actual per unit price of popcorn is not stated anywhere on the sign. Regular readers may recall a question from a financial literacy test used in a recent Statistics Canada Survey: True or false: By using unit pricing at the grocery store, you can easily compare the cost of any brand and any package size. In this case, the answer is false. The only unit price listed on the sign, 70.6 cents per 100 grams, corresponds to a price of $1.99 per 282 gram box, not the actual price of $1.50 per box.
I would begin a financial literacy course with the basics of behavioural economics. For students who are not yet ready for Nudge, I would start with articles from cracked.com, such as 5 things nobody tells you about being poor or 5 things everyone forgets to check when apartment hunting (Sample advice: "read the goddamn lease before you sign it. It sounds obvious, but it's like telling people that they should read the terms of service before hitting "Agree" on a video game.")
A key insight of behavioural economics is that our choices are easily manipulated. "Save 98 cents when you buy 2" seems like more than "49 cents per box", causing the consumer to over-estimate the potential gains from buying popcorn on sale. The "two for $3.00" sign creates a two-box reference point, anchoring purchase decisions upwards from one box towards two. If the typical consumer purchased three boxes at a time, the sign would almost certainly have said "4 for $6.00".
Financial literacy curricula promote wise consumption decisions be emphasizing the difference between "wants" and "needs", for example, here or here. Yet wants and needs are are not nicely distinct and easily separable. Social and economic forces shift "wants" into "needs", as anyone who has participated in a parent-child discussion of cell-phone plans knows.
Moreover, even when people are able to separate out needs from wants, and plan to buy no more than they need, they succumb to temptation. It takes a lot of self-control to resist the row upon row of attractively packaged, strategically positioned, heavily marketed junk at the supermarket - and self-control is hard.
Sometimes the best way to resist temptation is to know that one won't, and structure one's life accordingly - install self-control browser software, avoid going shopping, place cookies in opaque containers in high shelves where they can't be seen or reached, and so on. These temptation-resisting strategies can be taught. Indeed some European Union financial literacy materials teach "supermarket self-defence", discuss "traps" marketers use and teach ways of avoiding them.
Unfortunately for confused popcorn purchasers, however, in Canada businesses tend to have a greater say in the development of financial literacy curricula than consumers or consumer advocates. For example, the Canadian task force on financial literacy was "chaired by Donald A. Stewart, Chief Executive Officer of Sun Life Financial Inc", while "L. Jacques Ménard, Chairman of BMO Nesbitt Burns, was Vice-Chair." A curriculum designed by banks, insurance companies and financial advisors is not going to teach students to be deeply cynical about the financial services industry. It's not about to reveal the secrets of marketing; the myriad ways that marketers nudge people to make the choices they do.
Yet this is the financial literacy education people really need.