How Adam Smith Teaches Students to Get Rich! The Impartial Spectator Visits Our Classroom

How Adam Smith Helps Me Teach

Modern personal finance is often treated as a series of math or financial products problems, yet the primary obstacle to wealth is not a lack of calculus but a lack of self-command. By integrating the eighteenth-century moral philosophy of Adam Smith into our curriculum, we provide students with the psychological framework necessary to bridge the gap between knowing what to do and actually doing it. This article explores how we use Smith’s insights to master the most difficult variable in any financial equation: ourselves.

The following Smithian concepts guide our classroom simulations and behavior:

• The Desire to be Lovely: From The Theory of Moral Sentiments (1759).

• The Impartial Spectator: From The Theory of Moral Sentiments (1759).

• Self-Command: From The Theory of Moral Sentiments (1759).

• The Four Sources of Moral Approval: From The Theory of Moral Sentiments (1759).

• The Invisible Hand: From The Wealth of Nations (1776).

About the author:  Jeff Hulett leads Personal Finance Reimagined, a decision-making and financial education organization. He teaches personal finance at James Madison University and provides entrepreneurial services. Check out his book -- Making Choices, Making Money: Your Guide to Making Confident Financial Decisions.

Jeff is a career banker, data scientist, behavioral economist, and choice architect. Jeff has held banking and consulting leadership roles at Wells Fargo, Citibank, KPMG, and IBM.

Every Behavioral Personal Finance class functions as a live rehearsal for a fulfilled life. We do not merely discuss theories about money. We practice the art of becoming "rich" in the broadest sense of the word. In economic terms, our goal is to help students reveal their true preferences and maximize their Utility. Each session operates as a high-impact simulation where students make the critical decisions defining their futures.

We buy houses together and navigate the complexities of car dealerships. We open credit card accounts, fund robo-advisors, and manage the costs of pets and weddings. These are simulated purchases, yet we design them to mirror reality as closely as possible without the actual exchange of money. Our curriculum also applies this decision-making lens to careers and higher education, treating a degree or a job offer as an investment in human capital. While these simulations involve dollars and cents, the real exercise is learning to align financial resources with personal values. For one student, being "rich" might mean accumulating significant capital; for another, it may mean having the financial flexibility to pursue a lower-paying but deeply meaningful calling. In either case, we simulate a consistent, repeatable decision system to ensure their financial choices lead to long-term fulfillment rather than just a larger bank balance. By leveraging compound interest, we show how even modest incomes lead to significant wealth.

These simulations provide a safe environment to master a consistent, repeatable decision system. This system relies on modern choice architecture and behavioral economics to help each student identify and execute the unique choices aligning with their personal values. Furthermore, our system addresses a classic Smithian challenge: it helps make the "invisible hand" more visible.

In today’s information-abundant, attention-scarce world, this visibility is vital. Modern consumer platforms often prey on our neurological wiring, making disciplined choice difficult. Our Adam Smith-inspired classroom provides a necessary shield against these accelerating forces.

While Smith used his famous metaphor to describe how individual pursuit of self-interest can unintentionally benefit society, students often struggle to see how small, daily choices aggregate into significant life outcomes. By visualizing the long-term impact of their decisions, students see the invisible forces of compound interest and opportunity cost at work. Because each class covers a unique financial milestone, physical presence needs to be prioritized. I can only guide my students toward wealth if we practice these maneuvers together in the classroom.

Where Adam Smith Helps Us Teach

This curriculum is currently deployed across a broad range of educational environments, from middle schools and high schools to major universities. At James Madison University, and at institutions like George Mason University—the home of the Adam Smith Program—students face a world of competing priorities. Social obligations, work, and rest often pull focus away from the classroom. To help students raise the priority of their education, I look toward Adam Smith.

Smith remains the original behavioral economist because he recognized that human choices are driven by passions and social specters rather than cold calculation. Long before modern psychology, he identified the internal struggle between our immediate impulses and the self-command required for long-term flourishing. His 1759 work, The Theory of Moral Sentiments, provides the psychological foundation for my extra credit assignment: The Commitment Device Challenge.

Adam Smith's Basis For The Commitment Device

A commitment device is a technique where an individual makes a choice in the present to restrict their own future options. This strategy prevents our future selves from acting against our long-term interests. Nobel laureate Richard Thaler popularized this concept by demonstrating how "Choice Architecture" and "Nudges" help humans overcome cognitive biases. Thaler showed humans are not perfectly rational actors but instead need systems to protect them from their own impulses. In our class, the challenge works through a specific "trade."

To earn a 100% replacement grade on their lowest quiz, a student must qualify a "Conscience Person." This person must be someone outside the student body whom they respect. The student emails me, copying this person, to qualify why they would feel embarrassed to tell this individual they missed a class. For at least six weeks, the Conscience Person sends the student "nudges" or reminders to attend. To win, the student must show up for every class, allowing for only one "oopsy" absence.

Smith observed humans possess a dual nature. He famously wrote, "Man not only desires to be loved, but to be lovely." To be "loved" implies receiving external rewards. The quiz grade represents this external "love." However, to be "lovely" means being worthy of that praise. By involving a Conscience Person, I tap into the student's desire for loveliness.

Adam Smith and The Impartial Spectator

When a student chooses a mentor or parent, they externalize their moral compass. Smith describes the "Impartial Spectator" as an imagined observer who judges our conduct from a neutral perspective. When competing priorities tempt a student to skip class, this internal voice may struggle to be heard. The Conscience Person acts as a physical representative of the Impartial Spectator. A text message from a parent creates a social incentive to follow through. The student attends class because they wish to remain lovely in the eyes of this observer.

This exercise also serves a secondary purpose: it positively engages the student’s broader educational support system. It transforms the family member or mentor into a partner in the learning process. Furthermore, it teaches the student how to build and use commitment devices for future financial hurdles, such as automated savings or retirement contributions. This practice ensures students learn to deploy these tools long after the semester ends.

This exercise aligns with the four sources of moral approval Smith identified:

	1. The student finds sympathy with the motive of their Conscience Person.
	2. The student recognizes their future self as a grateful beneficiary of today’s discipline.
	3. The student learns to respect general rules of conduct.
	4. Finally, the student appreciates the beauty of utility found in a system designed for success.

Adam Smith's Bridge To Future Wealth

Smith believed self-command constitutes the most essential virtue. Without it, we cannot restrain immediate impulses to serve our long-term interests. By using a commitment device, students practice this self-command. They use their social relationships to bridge the gap between their present actions and their future fulfillment.

This curriculum does not merely point toward the opportunity for wealth; it gives students the explicit permission and a practical road map to achieve it. Adam Smith helps me teach more than just budgeting. He helps me teach how living below one's means leads to lasting satisfaction. While the simulations in class provide the technical skills for building a fortune, Smithian philosophy provides the emotional discipline to show up for the job. My students leave the semester with higher quiz scores and a proven method for mastering their own behavior.