Combating Economic Illiteracy
A dozen years ago, in 2012, the National Assessment of Educational Progress (NAEP)—better known as our Nation’s Report Card— tested the economic literacy of U.S. students. Approximately 11,000 12th graders were tested; nearly 60% failed to qualify as “proficient” in the subject. There have been no further NAEP economic tests since then.
Many of the students tested in 2012 just voted in their third presidential election. The economy, according to multiple surveys, was a deciding factor.
Unfortunately, many younger voters don’t know enough about inflation, the debt, tax rates, the high cost of food, housing and other everyday needs, tariffs, trade, and other economic matters to make informed decisions on economic issues. Worse, they don’t even know how much they don’t know.
As a practical matter, many Americans in the 18 to 29 age group are often economically illiterate. That’s because just 28 states require some form of economics coursework for students to graduate from high school, according to the Education Commission of the States.
It’s almost impossible to understand the world we live in, however, without at least a basic understanding of economics.
The Federal Reserve Bank of St. Louis, in its toolkit for teachers, identifies 15 economic topics that are indispensable for understanding the economic ups and downs we face individually, in our communities, and as a nation. The topics include everything from economic growth, the role of financial institutions (banks, etc.), supply and demand, fiscal policy (government spending and tax rates), globalization, and monetary policy (purview of the Federal Reserve), to how businesses, policy-makers, and investors use “macroeconomic indicators”—such as Gross Domestic Product (GDP), the Consumer Price Index (CPI), and the unemployment rate—to chart the road ahead.
The toolkit also includes a unit on the difference between “absolute advantage” and “comparative advantage.” It sounds complicated, but it isn’t. It explains why the United States provides the world with the latest cutting-edge technologies and life-saving medicines and Bangladesh provides the U.S. and the world with clothing.
Some might dismiss the St. Louis Fed topic list as focusing too much on minutiae while ignoring the big picture—“getting tangled in the weeds,” as others put it. But the fact is: You can’t understand the big picture if you don’t understand the details. All these different factors—supply and demand, globalization, fiscal policy--are what determines whether jobs will be waiting for students when students are ready for jobs.
So, why is the study of economics downplayed (or ignored) in so many school systems—and what can be done to elevate the prominence of the “dismal science”?
I can’t answer the why. You’ll have to ask members of your local school board and the officials they appoint to lead your schools.
But there are plenty of things teachers, parents, and other educators can do to close this gap. They can advocate for more economics education by writing to their school boards, superintendents, and local newspapers about the need for more emphasis on the vital subject. Or they can attend school board meetings in person to raise awareness and champion economics in the classroom.
But they needn’t wait for others to act. Concerned teachers and parents can take the initiative by strengthening their own teaching skills and economic knowledge. Free education materials—including texts and lesson plans—are available online from the St. Louis Fed, the American Economic Association, our organization, and others. They’re designed not only to teach students about economics, but to get them excited about the subject.
And to keep students excited, teachers can enter their students in the United States Economics Olympiad—the all-American edition of an international competition started in Eastern Europe after Soviet Communism collapsed. Registration for the competition began November 1 and continues through January 31.
The Economics Olympiad is more than just a competition—it’s a platform for students to think critically about global economic issues and prepare them for future leadership roles. Participating students not only represent their families, schools and communities, they gain insights that will help them make informed decisions throughout their lives.
After all, another presidential election is just four years away.
