MAKING THE CASE FOR BASIC ECONOMICS BEING

REQUIRED OF ALL COLLEGE STUDENTS:

THE LINK BETWEEN ECONOMIC KNOWLEDGE

& INFORMED VOTERS: AN EXPLORATORY

EMPIRICAL STUDY

D O N D A A K E , O L I V E T N A Z A R E N E

U N I V E R S I T Y

K A T H L E E N M A Y S , E A S T T E X A S B A P T I S T

U N I V E R S I T Y

P A U L K O C H , O L I V E T N A Z A R E N E

U N I V E R S I T Y

PURPOSE OF SESSION

Report results of an original economics knowledge/literacy/attitude instrument.

Presents the case that there is an important link between economics and political decisions.

Christian students and voters must be well-versed in basic economic principles if they are to meet their obligation as citizens.

The Question is: Are they ?

WHY THIS IS IMPORTANT-IF WE ARE TO “LEAD

THE WAY?”

Definition of what a well-educated person

should be has not always been a high

priority for business departments.

We sometimes have ceded those

arguments to other departments such as

the arts and humanities, and religion.

WHY THIS IS IMPORTANT-IF WE ARE TO “LEAD

THE WAY?”

In our globalized world we have generated great wealth.

We, in recent years, have experienced significant economic stresses.

Many proposed political solutions.

Many “so called” well-educated people lack basic economic and political understanding.

This can lead to potential flawed policy decisions that can adversely impact all of us!

A BRIEF HISTORICAL PERSPECTIVE

THE LINK OF ECONOMICS TO A DEMOCRATIC SOCIETY

Laurence Leamer, as far back as 1950, in an

American Economic Review article observed

that the basic issues remain essentially as they

were in 1890 (or even in the 1790’s).

“The ultimate function of economics and

economists is to help people learn how to live

in a free society – and how to maintain and

perhaps improve it.”

A BRIEF HISTORICAL PERSPECTIVE

THE LINK OF ECONOMICS TO A DEMOCRATIC SOCIETYLeamer points out:

First, we must understand the nature of a free

society and the nature of economics and its role

in relation to democratic social action.

Secondly, we need to reflect upon and experiment

with economic education.

Third, we need experiment with alternative

methods of instruction, evaluating them in

terms of their efficacy for educating citizens for

effective participation in our free society.

FURTHER COMMENTARY ON STATE OF

ECONOMICS EDUCATIONThe State of Economic Education. Salemi,& ; Siegfried, J.

American Economic Review.

The good news: college economic education appears to

have a lasting effect on economic reasoning.

The bad news: Americans know woefully little about our

economy and about economic ideas.

Surveys provide a sobering appraisal of economic literacy in America.

ECONOMICS & GENERAL EDUCATION- “HOPES AND

FEARS ACROSS THE YEARS”

Kneeler & Underwood (2003)

Journal of Economic Issues (Association for Evolutionary Economics)

Principles course is becoming afflicted with the problems in graduate economic training – emphasis on tools and techniques at the expense of real world knowledge of the economy.

Effective course should give students:

Important grounding in the real world economy understand the complexity of our domestically and international economy.

Use compelling stories and exciting debates that excite rather than bore the callow undergraduate.

Emphasize the important lesson of history that must not be forgotten.

IMPORTANT ASSUMPTIONS OF THIS STUDY

Democracy at its core relies on an informed voter

base.

A majority of political decisions have a fundamental

underpinning of economics.

College graduates may be relatively well-educated, but

if they are seriously deficit in basic economic

knowledge, the consequences for the country are

negative.

Hopefully voters are informed about current

events, have a moral Christian base, understand

history and basic civics,.

We contend, however, that economics has a relatively

disproportionate impact compared to other factors.

IS THERE A PROBLEM WITH OUR STUDENTS’

UNDERSTANDING OF CORE ECONOMIC

PRINCIPLES?Sad truth is that economics is perhaps the least developed factor

influencing the political decisions of many college graduates.

Most colleges and universities (and high schools) require courses in history, civics, ethics, and sciences.

But many non-business college students have never explored even basic economic principles.

We argue that this is dangerous to the future of the country!

PROPOSED MODEL

BUSINESS/ECONOMICS DEPARTMENTS

Most require at least one core economics course.

Many our institutions a separate economics department may

exist.

The vast majority of students who enroll our economics

courses are business/economics students.

We do have students from a wide variety of other

disciplines, (including education, social work, political

science, and pre-law, to name a few) who may take it as

an elective.

GENERAL EDUCATION REQUIREMENTS AT MOST

CCCU SCHOOLS INCLUDE

Between 2-4 courses related to theology and biblical education

Language or equivalent

History, social sciences

Physical and biological science requirements

Little room is left over any additional course work

We have all likely fought “GEN ED WARS”

MANY BUSINESS FACULTY WOULD AGREE..

The importance of general education courses.

But recognize the need for a Real World education as well.

We find it a tad ironic, if not outright irritating that

students spend four years earning a degree and run up

debt between $20,000-80,000.

Yet, we cannot even institute a required university-wide

course on personal financial management, let alone

economics.

COULD IT BE…..?

MANY undergraduate students will leave

the institution unprepared for the

financial and economic challenges

This can result in under performing in

their career, financial hardship, marital

difficulties, and poor stewardship.

And uninformed as voters!?!

IN THE END WE HAVE COME TO

Not praise or kill the “Caesar of General

Education”

but to try and reform him.

We ask you to consider advocating more

economics education for the sake of our

students’ future, the country and our Christian

heritage?

And perhaps drive Economics into the

General Education Core if its is not

already there!

FOX NEWS COMMENTATOR AND POPULAR LIBERTARIAN JOHN

STOESSEL HAS SOME SOBERING WORDS FOR US…

“When I speak on college campuses, students

often ask what can be done about the

"problem" of young people who don't care

enough to vote. I always say that I don't see it

as much of problem "because most of you don't

know anything yet. I'm OK with you not voting!"

The students laugh, but I'm not joking.

STOESSEL CONTINUES..

It wasn't until I was about 40 that I started to believe I had acquired a good sense of what domestic policies might serve people well. (I only started to think I knew what ought to be done after years of reporting and reading voraciously to absorb arguments from left and right.)

The idea that most voters vote without having done much of that work is, frankly, scary.

STOESSEL CONTINUES..

George Mason University’s, Bryan Caplan, says few people think about their vote or even see any benefit in doing so. He argues that most voters cast their ballot on the basis of irrational biases about economic matters.

That's why so many candidates, hostile to free markets, profits, free world trade and immigration, get elected. People tend to acquire their wrong opinions about economic policy packaged in worldviews they inherited while growing up. So, people vote for candidates who make them feel good. They vote irrationally.”

AGAIN WHY THIS MIGHT BE IMPORTANT

OR WHY IT MIGHT NOT MAKE ANY DIFFERENCE!

If relationship exists between basic economics education

and being an informed voter, should our institutions

require economics in the core curriculum?

Does a Christian worldview impact economic and political

views?

Better informed students will not only be better voters but

more engaged citizens.

They should rightfully serve on boards, commissions, and

even elected office.

In our business/economics departments we need to

measure “what is sticking!”

AGAIN WHY THIS MIGHT BE IMPORTANT

OR WHY IT MIGHT NOT MAKE ANY DIFFERENCE!

A cynical view:

Students are students and always have been

when it comes to remaining oblivious to the

outside world during the years they are in

college.

Since voter turnout among young voters is

relatively low, whether they are informed or not

makes little difference.

THE STUDY

Original Survey was constructed using

*previous economic surveys

*original questions to measure items, such as attitudes

*demographics, status of major, number of course taken

Conducted at Olivet Nazarene University, East Texas Baptist

University, and LeTourneau University

Total usable questionnaires included:

n=211, Business students =130, Non-business=81

One or more econ classes=157

No eco classes =44

SURVEY - SEE HAND OUT

18 Knowledge-based questions – Right or wrong

answer

9 Opinion-based questions (6 point Likert scale)

5 Open-ended questions

12 Demographic questions

3 Misc. questions

47 Total questions

KNOWLEDGE BASED QUESTIONS - EXAMPLES2. What is the basic purpose of profits in our market economy?

a. Pay for wages and salaries of workers.

b. Lead businesses to produce what consumers want.

c. Transfer income to the wealthy.

d. Provides taxes for government spending.

e. All of the above.

5. The purchasing power of people's incomes is most affected by:

a. The inflation rate.

b. The trade deficit.

c. The balance of payments.

d. The US national debt.

e. The unemployment rate.

OPINION BASED QUESTIONS - EXAMPLES

OPENED ENDED QUESTIONS

KEY RESULTS

KEY RESULTS

KEY RESULTS

TOTAL NUMBER CORRECT 18 TOTAL

MEAN CORRECT BY SUB GROUPS

Overall mean 9.26

Gender Male & Female 9.73 vs. 8.69*

Business vs. Non Business 9.62 vs.8.69*

Economics course vs. no course 9.43 vs. 8.78

MEAN CORRECT BY SUB GROUPS

Overall mean 9.26

General vs. Strategy 8.96 VS. 10.58**

Fr/Soph vs. Jun/Sen 8.74 vs. 9.82**

SOMEWHAT SURPRISING LACK OF DIFFERENCES ON

QUESTION BY QUESTION BASIS

Group comparisons Number of

significant

differences on

question by question

basis

Comment

Economic courses vs.

no economic courses

2 Surprising results!

Business vs. Non-

Business

3

Male vs. Female 4 Could be based on

major- but generally

little differences

A NOTE OF CONCERN ABOUT PESSIMISM..

TEMPORARY OR THE NEW NORMAL?

WHEN ASKED ABOUT THEIR VIEW GOING FORWARD STUDENTS

WERE PERHAPS UNDULY PESSIMISTIC..

SOME TYPICAL COMMENTS..

Because economy is growing slowly

Because of magnitude of debt we are in

Budget deficit and increase in monetary supply will cause inflation, harming our

wealth

Congress can't make up their minds on effective policy

Do not know if America can redeem itself

Don't really pay attention to what's happening

I am an optimist

My generation tends to believe everything without looking into it

Large deficit, constant increase in spending

We will pay into SS and never reap the benefits

No matter what happens, it all works out for the glory of God

We are always changing economically; not sure what to expect

This generation seems to lack interest in the government

Will be determined by upcoming election

BUT THIS PROVIDES US SOME OPPORTUNITIES

TO SHARE..

WE’VE BEEN HERE BEFORE

WE HAVE RECOVERED IN THE PAST

IN TIMES OF DIFFICULTY THERE IS ALSO GREAT OPPORTUNITY

ULTIMATLEY OUR FAITH IS IN GOD

LIKELY TO VOTE..

OTHER INTERESTING RESULTS

Can they correctly identify current vice-president of the United States

CAN YOU NAME YOUR U.S. SENATORS?

SAY WHAT? CONGRESSMAN WHO?

THE WAL-MART QUESTION…PUTTING GOVERNMENT

SPENDING INTO TO PERSPECTIVE!

14. Large corporations such as Wal-Mart, Exxon, Apple, and

Microsoft often report annual profits in the range of

billions of dollars. For example, Wal-Mart in 2011 had

profits about $16 Billion. Suppose I would take all the

profits from Wal-Mart and use it to finance the Federal

Government. Approximately how many days, (or weeks

or months) could I run the Federal Government with Wal-

Mart’s annual profit?

In terms of days: ___________Total Days

THE WAL-MART QUESTION…PUTTING GOVERNMENT

SPENDING INTO TO PERSPECTIVE!In terms of days: ___________Total Days

Answer by Students…

Low 0

High 365

Median 7

Mean(trimmed) 17.9

The Actual Answer = approximately 1.5 DAYS

Question: Do students/voters begin to comprehend size of Government Spending?

OR ANOTHER WAY WE SOMETIMES PUT IT– THE

SEARS TOWER (WILLIS) ANALOGY PER DAY!!

ESTIMATED PROFITS OF U.S. BUSINESS

15. Companies have different level of measures of

their profitability, but the most important one is

the percentage of profit they make on sales

after they pay all their expenses, and

employees, but BEFORE taxes and dividends.

What percentage do think the average company

overall in the United States makes as a

percentage on sales? ____________%

ESTIMATED PROFITS OF U.S. BUSINESS

15. What percentage do think the average

company overall in the United States makes as

a percentage on sales? ____________%

Answer by Students…

Low 2

High 100

Median 20

Mean(trimmed) 26.8

The Actual Answer About 3- 15%

Question is: as a voter does being off by a magnitude of 2-3

times make any difference on what policies they vote for?

SOME SURPRISING OR PREDICTABLE RESULTS?

SOME SURPRISING OR PREDICTABLE RESULTS?

SOME SURPRISING OR PREDICTABLE RESULTS?

SOME SURPRISING OR PREDICTABLE RESULTS?

SOME SURPRISING OR PREDICTABLE RESULTS?

SOME SURPRISING OR PREDICTABLE RESULTS?

SOME SURPRISING OR PREDICTABLE RESULTS?

IMPLICATIONS FOR PROFESSORS AND

CHRISTIAN EDUCATIONAL INSTITUTIONS

Our students are somewhat informed but we have

a long way to go if they are to be considered

informed voters.

There were not large differences between groups

including those who had economics and those

who did not; same is true of business vs. non-

business students

Economics needs to be heavily integrated into

virtually all business courses.

IMPLICATIONS FOR PROFESSORS AND

CHRISTIAN EDUCATIONAL INSTITUTIONS

Some evidence, that we can make the case that all

students should be required to take at least one

economics course - not quite yet

Study needs to be refined - with a much larger sample

of students from other majors, such as religion,

education, social work, communication, etc.

A more comprehensive “knowledge test “needs to be

developed

Contradictory attitudes need to be explored, i.e. health

care

IMPLICATIONS FOR PROFESSORS AND

CHRISTIAN EDUCATIONAL INSTITUTIONS

Data gathered from graduate students, business

people, and the general public would provide

fascinating comparisons.

A clear definition of what is meant by economics

and economics education should be employed.

The original proposal sought to examine

moral/ethical considerations. That portion of the

research was dropped, but it needs to be

included in future research.

ADDITIONAL REFERENCES

Alauddin, M., & Butler, J. E. (2004). Teaching economics in a changing

university environment: Some Australian experience. International

Journal of Social Economics, 31(7/8), 706-720.

Andres, G. (2008, October 31). The changing impact of higher education:

Voters’ choices should be cause for concern to Republicans. The

Washington Times. Retrieved from http://www.washingtontimes.com

Becker, W. E., & Watts, M. (1996). Chalk and talk: A national survey on

teaching undergraduate economics. American Economic

Association, 86(2), 448-453.

REFERENCES

Brasfield, D. W., Harrison, D. E., & McCoy, J. P. (1993). The impact of high

school economics on the college principles of economics course.

Journal of Economic Education, 24(2), 99-111.

Castigila, B., & Morgan, W. (2003). Framework: The need to incorporate

economic literacy across the liberal arts curriculum. Proceedings of the

Allied Academies International Conference, USA, 6(1), 3-8.

Chen, H., & Volpe, R. P. (1998). An analysis of personal financial literacy

among college students. Financial Services Review, 7(2), 107-128.

Jappelli, T. (2010). Economic literacy: An international comparison. The

Economic Journal, 120(548), F429-F451.

REFERENCES

Jephcote, M. (2004). Economics in the school curriculum: Its origins, and reflections on the workings of a subject community. Teaching Business & Economics, 8(1), 13-19.

Lucas, R. E., Krueger, A. B., & Blank, R. M. (2002). Promoting economic literacy: Panel discussion. The American Economic Review, 92(2), 473-477.

Lumsden, K. G., & Alex, S. (1987). The economics student reexamined: Male-female differences in comprehension. Journal of Economic Education, 18(4), 365-375.

Shipley, C., & Shetty, S. (2008). Factors affecting economic literacy of college students: Some additional evidence. Journal of Economics and Economic Education Research, 9(1), 13-18.

QUESTIONS, COMMENTS, CRITICISMS, STONES..

PROPOSED MODEL