May 21, 2009 — This spring, one University of Virginia class set a goal that many people would envy: to become financially literate enough to be able to critically read and analyze articles in The Economist.

In the process of bringing 35 students closer to that goal, the class's teachers, fourth-year economics majors Grace Ng and Vadim Elenev, came closer to one day writing articles for the Economist.

As one of U.Va.'s student-initiated courses, Ng and Elenev created, designed and taught a new course, "Anatomy of a Financial Crisis." The interdisciplinary course's two-credit pass/fail grading was overseen by faculty sponsor Charlie Holt, an economics professor.

The class had no prerequisites and was geared toward students with no background in economics or finance.

Though the class opened for registration just three days before the first class meeting, the 30 spots were filled in 36 hours. By the first class, 150 students were on a waiting list, prompting Ng and Elenev to expand enrollment to 35.

Part of the course's appeal was its timeliness, explained Matt Fifer, who, along with classmate Marisa Roman, co-chaired the Student Council's Academic Affairs Committee that pushed to revitalize U.Va.'s offerings of student-initiated courses – and then signed up for the class.

Students can roll out new course offerings more quickly than faculty can, Fifer noted, because lining up a faculty member to teach a course involves a number of hurdles, including securing funding.

Fifer took the course to gain better framework for understanding financial news and the discussions of his "more financially literate friends." By semester's end, he had a grasp of the financial acronyms that pepper Wall Street Journal stories, he said. "I'm on the cusp of being conversant, and I knew absolutely nothing at the start."

A student-initiated and taught course is the greatest possible exercise of student self-governance, Roman said, adding that the course's swollen waiting list was a vote of confidence. "No one knows better than the students what the students want to learn about," Fifer added.

"The success of this course, and others like it, is a case of student initiative meeting faculty support and administrative responsiveness to create a successful class offering," said Gordon Stewart, associate dean for undergraduate studies in the College of Arts & Sciences, who reviews and approves proposals for student-initiated courses.

Explaining the financial crisis to a lay audience required addressing an enormous range of topics, from how the Federal Reserve and monetary policy work to questions of political economy and the fine points of financial regulation – each of which could be the subject of a full course.

Elenev double-majored in economics and mathematics with a financial math concentration, while Ng added a foreign affairs minor to her economics major. Between them, they drew on what they had learned in at least nine different U.Va. courses, ranging across politics, history, economics and the McIntire School of Commerce.

"The most difficult part about teaching this course was deciding what's important and what's not, and among the stuff that's important, how to structure it," Elenev said.

For guidance, Elenev read Niall Ferguson's "The Ascent of Money" and Milton Friedman's "A Monetary History of the United States, 1867-1960" both of which feature the type of a linear, historical narrative style that they were aiming for.

The assigned readings included numerous news and magazine articles, along with Michael Lewis' autobiographical book "Liar's Poker" that details how he took part in Wall Street's development of mortgage-backed securities. The book was a hit and several students read ahead and finished it over their spring break.

To complement the narrative readings and drive home certain key concepts, Ng and Elenev had the class participate in a couple of behavioral economics experiments. In one, the students ended up paying twice what an asset was worth even when they knew the real value of the asset, thereby taking part in the very decisions and behavior that drive a pricing bubble.

In another experiment that simulated a bank run, the students knew they could double their money if they waited a day before withdrawing their money, but one person's decision to not wait set off a bank run.

"The class really gets engaged when we run an experiment," Elenev said. "It's a tremendous teaching tool."

While the class was geared toward those with no finance background, some did have a strong background, and Ng and Elenev welcomed the back-and-forth with their peers during class discussions, and sometimes even learned new things.

"We've given them enough foundation that, at this point, the amount of qualitative knowledge they can have on this topic is almost entirely up to them," Elenev said. "If they want to start watching CNBC two hours a day and reading the Wall Street Journal and Financial Times every morning, within a couple months they will teach us a lot of things we don't know."

Perhaps the biggest learners in the class were Ng and Elenev themselves, they were quick to point out. "I think the best way to learn something is to teach it," Ng said.

Both have been outstanding learners since well before this class. Elenev won the Economics Department's Outstanding Major Award and Outstanding Thesis Award for his 80-page distinguished majors thesis about behavioral economics experiments he created to simulate how voters' preferences respond to candidate debates and other political news.

Ng has written two chapters for economics professor Ed Burton's forthcoming book on the financial crisis. She and Elenev co-authored an article in the Virginia Policy Review, "The $700 Billion Gamble: Cracking the Credit Crunch, Part II."

After their teaching experience, both Ng and Elenev are more seriously considering teaching as a vocation, but not until at least a few years of work experience in the financial sector.

Both are headed to New York after graduation. Ng will be working in finance for Barclays Capital. Elenev will be working with derivatives and structured finance pricing models at Cornerstone Research, a litigation consulting firm.

Down the line, Elenev's ideal job would involve both teaching as a professor and doing consulting work to stay plugged in.

"This has been a great experience for me and for the students in the class, and for Vadim and Grace," Holt said. "This was truly an innovative course."

-- By Brevy Cannon