every k - 12 curriculum in the country. while physical education and even driver education are part of nearly every curriculum, financial education is mandated by only a handful of states as a requirement for graduation. alongside classes that prepare students to join the workforce we need courses that demonstrate how to use the financial compensation from their work to meet family necessities and build personal wealth in an era of complex financial products. students will need to identify situations in which it makes sense to borrow and choose among loan products. they need to know how to budget and save and how to select the best investment vehicles for their savings. and as the recent financial turmoil has taught us, they must understand how to prepare for and deal with financial contingencies such as unemployment or unexpected expenses. jump $ tart supports efforts to provide such an education. the federal reserve is working on several fronts to promote financial education that will help prepare young people to take on the responsibilities of market participants and manage the risks that come with the opportunities to spend, save, borrow, and invest. financial education that begins at a young age and extends through one ’ s life is the most effective preparation for making important financial decisions such as buying a car, purchasing a home, saving for retirement, borrowing for postsecondary education, and even choosing a career. in support of our efforts, the reserve banks have developed programming and curriculum to serve the needs of schools, educators, and students. among them are : katrina ’ s classroom, a free video - based curriculum developed by the federal reserve bank of atlanta that uses the stories of victims of hurricane katrina to teach middle school and high school students and their parents the importance of being financially prepared ; great minds think : a kid ’ s guide to money, a publication developed by the federal reserve bank of cleveland that helps families begin conversations about money ; and several essay and creative writing contests for students sponsored throughout the federal reserve system, designed to promote students ’ development of savings goals or encouraging them to apply economic thinking to a social problem. in addition to providing materials for financial education, the federal reserve has also begun to assess the effectiveness of the education programs it engages in, so that we can better evaluate the outcomes of our efforts. this research is intended to help us better answer the question, “ what works in education? ” so that we may allocate our resources in the best possible manner. while financial education is an important first step in enabling consumers to make informed financial decisions, it is also important that consumers

others in the industry or to an industry - wide index. that is an important reason why relative return benchmarking and index - tracking is commonplace. there is also evidence that investors adjust their portfolios on the basis of these relative metrics – for example, with stronger inflows into funds whose relative performance has been superior ( chevalier and ellison ( 1997 ), feroli et al ( 2014 ) ). these market conventions have the potential to amplify pro - cyclical swings in asset prices and investor flows. for example, in market upswings fund managers are likely to try and juice - up returns by searching for yield in an attempt to outperform their benchmark. the reverse occurs in the downswing when there will be a quest for safety to boost relative return rankings. but if everyone is playing this game, the result will be pro - cyclical pressures on asset prices, adding exuberance to the upswing and pessimism to the downswing. this increases the potential for mis - pricing in asset markets – by turns, risk premia becoming first too thin and then too fat. relative return benchmarking creates, in effect, a red queen race for the asset management industry ( ridley ( 1993 ), haldane ( 2012b ) ). other asset management conventions may also generate pro - cyclical swings. for example, index - tracking strategies, including through etfs, will tend to increase asset correlations and herding in investment flows ( bolognesi and zuccher ( 2008 ) ). the use by asset holders of a small pool of consultancies for investment advice may also generate correlated investment strategies. and the use of short - term performance mandates for fund managers is also likely to amplify pro - cyclical swings in asset allocation and asset prices. accounting rules : the 2000s saw the introduction of financial reporting standard ( frs ) 17 in the uk and statement of financial accounting standard ( sfas ) 158 in the united states. this fundamentally changed companies ’ accounting practices in respect of their pension obligations. in particular, companies were required to value pension assets at fair ( that is, mark - to - market ) values, with liabilities typically discounted using a corporate bond rate. pension surpluses and deficits then needed to be recorded on balance sheet. this change in accounting rules reshaped company and pension fund behaviour. for example, in a downswing, risky asset prices and safe rates tend to fall, raising measured