The National Assessment of Educational Progress released the
results of its first-ever assessment of economics on Aug. 8. At first glance,
the results seem positive, particularly when they are compared with the results
of NAEP assessments in other subjects, but don’t get too excited too fast.
The economics results show that 79 percent of high school
seniors performed at the basic level (a passing grade) or higher, and 42 percent
performed at the proficient level or higher, including 3 percent at the advanced
level. This performance stacks up well compared to the results in other
subjects. For example, in the most recent NAEP assessments, only 47 percent of
high school seniors passed the U.S. history test, 61 percent passed the
mathematics test, and 73 percent passed the reading test.
These relatively positive results may be due to more students
taking economics in high school. Although less than a third of the states
require an economics course, two-thirds of high school graduates have taken one.
Some 16 percent take economics at the Advanced Placement or International
Baccalaureate level. The percentage of students taking economics at advanced
levels is particularly high in comparison to other subjects.
The argument for economic education is that a more
economically literate population will make choices and support public policy
that best provides the goods and services that we need. It is not uncommon,
however, for textbooks to portray such things as free market competition,
private property and entrepreneurship in a suspicious light, while presenting
government intervention and its economic aftermath with little or no critical
What do the NAEP test results reveal about market solutions
versus government solutions to economic problems? The answer to this question
depends on what was on the test and whether knowledge of economics translates
into more pro-market policies.
NAEP did not release the entire test, but the sample
questions shown below represent sound economic reasoning. The numbers represent
the percentage of students who provided the correct answer on a multiple-choice
question or wrote an answer to an essay question at the basic level.
73 percent understood the benefit and opportunity cost
of giving up a part-time job to go to college.
60 percent knew the cause of a government budget
51 percent knew that removing restrictions on trade
decreases the price of imported goods.
46 percent knew that a government-imposed price floor
on chocolate causes a surplus of chocolate.
40 percent understood that governments impose trade
barriers even though they hurt the economy because the cost for any one
consumer is small and the benefit to the affected industry is large.
36 percent knew that businesses maximize profits where
marginal revenue equals marginal cost and hire workers based on the marginal
revenue and marginal cost of the worker.
36 percent knew that the personal income tax is the
largest source of revenue for the federal government. Thirty-one percent
thought it is the sales tax.
Based on these results, students might oppose the minimum wage, support free
trade and understand why legislators might pass trade restrictions. However,
these results hardly support a finding of widespread economic literacy.
The question of whether a greater knowledge of economics
causes more pro-market policies is difficult to answer because there is little
research on it. One of the more recent and extensive studies of economic
education in high school and attitudes toward markets was conducted by William
J. Boyes of Arizona State University and Amy M. Willis of the Arizona Council on
This study tested 1,715 Arizona high school students on both
economic knowledge and confidence in markets. Only 3 percent of the students
agreed "completely" or "with slight reservations" that the price mechanism
should be used to allocate resources in 10 hypothetical economic scenarios.
However, economics education does improve this dismal situation. In nine of the
10 scenarios, students taking an economics course favored the price mechanism
more than students who had not taken economics. Advanced Placement and
International Baccalaureate students did even better, with 11 percent favoring
the price mechanism in all 10 scenarios. The authors concluded, "Economic
literacy and agreement with market allocation tend to be positively related,
while literacy and agreement with government mandate tend to be negatively
related. In general, then, literacy and acceptance of market allocation are
The bottom line is that the NAEP economics results are better
than many economics educators expected. Well-trained teachers increase economic
knowledge and economic knowledge increases acceptance of the market. But until
economic literacy is widespread, don’t hold your breath waiting for voters to
defeat referendums that increase the minimum wage, build new sports stadiums or
mandate health coverage.
A writer and presenter of economic education, John Morton is
senior program officer of the Arizona Council on Economic Education and formerly
the vice president for program development at the National Council on Economic