Stocks for Fun and Propaganda

In schools across the country, students take part in highly popular stock market simulation games. But beware. These games often teach the wrong lesson.

By Mark Maier

Every year, more than one million U.S. elementary and high school students play the stock market at school. They use pretend money and imaginary trades, but simulate the feel of real-world finance, tallying their gains and losses as they trade at prices relayed electronically from the stock exchanges. These stock market simulations come with complete lesson plans, worksheets, professional advice from real stockbrokers, and even cash prizes. No wonder they are so popular.

Melissa, a secondary school student, raves, “We are all having a blast and no one has even skipped class.”

Teachers, too, seem pleased. “The very first thing in the morning, before the Pledge of Allegiance, they want to check their stocks,” a middle school computer teacher in West Bend, WI, notes.

But stock market games and their accompanying curriculum guides present a rosy, one-sided picture of Wall Street, in which everyone starts out rich and all that matters is short-term profits. Omitting the less attractive side of the stock market fits conveniently with the corporate underwriters’ viewpoint, but it is poor training for future citizens.

$100,000 A NICE START

The most popular stock market games are played on the web. Stock market simulations are so sophisticated that they look just like actual trading. Participants can choose from nearly all available stocks, mutual funds, margin purchases, short selling, all at the prices delayed usually only a few minutes from actual stock market prices.

Many schools rely on the Stock Market Game funded by bankers and brokers through the Securities Industry Foundation for Economic Education. Increasingly, teachers are turning to commercially produced stock market games such as Stock-Trak and the Virtual Stock Exchange. These games are subsidized by advertising, usually for real-life, paid stock transactions. (Some commercial web sites have extended the stock market simulations to the “buying” and “selling” of predictions about athletes’ performances at performances at Wall Street Sports and film earnings at the Hollywood Stock Exchange.)

Nearly all games follow a common script. Students begin with a tidy sum, usually $100,000, with no reference to the source of this initial endowment – although one curriculum offers the unlikely scenario that students have inherited money from “Uncle Mort,” who helped Brazilian Indians profit from rainforest products. Since everyone starts out with the same amount of money, the games perpetuate the idea that individual effort is the reason that some people get rich and others do not.

Of course, in real life the starting line isn’t even. Fewer than one out of 10 households own $100,000 in total financial assets, including not only stocks but also bonds, bank accounts, and retirement accounts. And in real life, stocks themselves are distributed in a very lopsided manner, with 10 percent of shareholders owning 90 percent of all stock, while the top one percent owns more than half of all shares.

Unequal distribution of stocks goes unmentioned in teaching guides such as the New York Stock Exchange’s The Stock Market Wants You, or the National Council on Economic Education’s Learning from the Market. Instead, these manuals emphasize the recent broadening of stock ownership, so that 50 percent of households now own stock. A true-to-life stock market simulation would show that, while it is true that more U.S. households own some stock than in the past, ownership has become even more unequal: The rich now own an even larger percentage of all stock than they did 20 years ago.


Stock market games reward students who take excessive risks. Analysis of game winners shows that the best strategy is for students to ignore diversification – owning stock in a variety of corporations – which is the starting point for all prudent investment. By focusing on a few stocks known to swing wildly in price, some students, either through blind luck or an ill-advised risky portfolio, will end the game with big winnings, beating students who took the safer, diversified route. When it became apparent that students with such careless investments consistently won stock market competitions, some games forced students to invest in at least four stocks and to make a minimum number of trades. But the winning strategy remains to gamble as much as possible.

In a typical classroom, the stock market’s random fluctuations will ensure that a handful of students will do well, tallying high profits and winning prizes put up at commercial web sites. Pride in such gains is misplaced. Students with losing stocks may feel an undeserved sense of personal failure, wrongly perceiving themselves as less clever than the game winners. When they are adults, students may expect the same returns earned by the lucky few, a lesson no more valid than if students practiced betting on horses.

The stock market games’ easy profits also might make students more receptive to recommendations to privatize Social Security. After all, if investing is simple and fun, wouldn’t we be better off making individual decisions about our retirement funds? In the real world, privatization would be inequitable, risky, and more costly than a simulation game in which everyone starts off with the same $100,000 and there are no penalties for a losing investment strategy.

Rather than asking students to pick a winning portfolio, teachers should use the stock market to show students the actual workings of corporate America. For example, reading the stock pages could help students to see corporate ownership behind popular name brands. Beginning with Oscar Mayer wieners, a student could learn that these hot dogs are produced by Philip Morris, the same corporation that makes Marlboro cigarettes, Miller Beer, and Velveeta cheese. These examples would show students the power over food marketing held by corporations such as the Philip Morris-Kraft conglomerate, and the problems of its recent merger with Nabisco Foods. Investigating these corporate connections could also help students explore the relations between the Philip Morris stock price and the corporation’s aggressive efforts to expand tobacco sales outside the United States-especially to young people.


Stock market games teach that buying stock gives one “ownership” of a corporation, that is, voting rights in decision-making. As one student put it, “I thought it was so cool I owned a part of McDonald’s.” The reality is that corporate governance is complex, with decision-making split between management and those with large numbers of shares. Sometimes a major shareholder will intervene in corporate decision-making. For example, recently when the Gateway computer company was doing poorly, Ted Waitt – who owned nearly a third of the stock – took over as chief executive. But small shareholders, even when they act collectively, rarely influence company policy.

Instead of perpetuating the myth of shareholder democracy, a better curriculum would ask students to find out how a local corporation decides to introduce a new product or move its production facilities.

A final problem is that stock market games almost never explore the problems caused by speculation. A 15-year-old Mamaroneck, NY, high school student explained: “It was so cool – my money could make money without me doing anything!” Remarkably, the possibility of recession and overall decline in stock prices are not mentioned in any of the leading teacher manuals. Instead, the stock market is portrayed as a wise judge, rewarding those who make the right choices. An accurate curriculum would point out that speculation is not only risky for individual investors but also potentially harmful for the entire economy, since it might divert funds from socially useful purposes.

Certainly, the lure of a compelling game, along with glitzy corporate-sponsored lesson plans, is attractive to overworked teachers. But if students are to learn how the economy actually works, teachers need to use stock market games with great caution, supplementing them with alternative activities to show the real world of unequal resources, impotent small shareholders, and reckless speculative bubbles.

The above is adapted from an article that appeared in Dollars and Sense (March/April 2001)). Reprinted with permission.

Mark Maier teaches economics at Glendale Community College in Glendale, California.