APPENDIX  K

Report by Dr. Walstad on the Case
For a Mandated High School Course in Economics and Personal Finance

Mandates for Economics Courses in High School
William Walstad* (February 21, 2003)

The best opportunity for increasing the economic understanding of all youth occurs in high school because the economics taught in high school is the only economics most youth ever get a chance to study.  Although college instruction in economics can also be effective, only about two-thirds (63%) of high school graduates enroll in college, and among this group only a minority (40%) take an economics course (Siegfried, 2000).  High school economics, therefore, serves an essential role in developing the economic literacy of youth in the United States.

An indication of the importance of economic education is the fact that enrollments in economics courses in high schools increased dramatically over the past two decades.  In 1982, based on studies of high school transcript data, about 24 percent of high school graduates took an economics course in grades 9 to 12.  By 1998, the percentage had almost doubled, with about 46 percent of high school graduates taking an economics course (NCES, 2001a), a percentage that has remained about the same in recent years.  The vast majority of these high school graduates (about 95%) took a course in basic economics rather than a course in advanced placement (AP) or college-level economics.

The chief factor influencing and sustaining enrollments in high school courses in economics is state legislative requirements for such coursework before graduation.  Thirteen states require high school graduates to take an economics course before they graduate (Alabama, California, Florida, Georgia, Idaho, Louisiana, New Hampshire, New Mexico, New York, North Carolina, South Carolina, Tennessee and Texas) (Dempsey, 2000).  The number of states with a mandate for an economics course has remained relatively constant since the late 1980s, indicating that such a mandate is of continuing importance.

Economics course requirements vary from state to state by course title, economics content coverage, and treatment of topics such as personal finance, business, or government.  Most courses cover traditional microeconomic, macroeconomic, and international economics content (NCEE, 1997), but there are some course differences because some states include special topics.  Personal finance is stressed as part of these courses in several states (Alabama, Idaho, New York and Tennessee).[1]  Another emphasis in state mandates is on the features of the enterprise system (Florida, Georgia, Idaho, Louisiana, New York and Texas).  One mandate combines the teaching of economics with government (North Carolina).  Another mandate calls for a course in basic business and economic education (New Hampshire).

California, Florida, New York and Texas each have many years of experience with mandated course instruction in economics and serve as good examples of how such mandates work.  These states are also the most heavily populated of the mandate states.  The most recent data on high school graduates show the largest number of high school graduates in California (321,371), followed by Texas (214,953), then New York (142,000), and finally Florida (104,555) (NCES, 2001b).  Together these four states accounted for 31 percent of the 2.54 million graduates from public high schools in 2001.  This percentage means that these states account for about 31 percent of high school course instruction in economics throughout the nation.

The California mandate for an economics course was established in 1989.  The course is typically taught as a one-semester course in the 12^th grade, with a course in government taught in the other semester.  In California, economics accounts for one-sixth of the three years of required instruction in social studies courses for high school graduates (.5 of 3 required social studies units).

Texas legislated an economics course in 1978.  The legislation calls for a course in “economics, with emphasis on the free enterprise system and its benefits.”  The course is actually part of a more comprehensive mandate for the inclusion of economics in student learning, K–12.  At the 12^th grade level, there is a mandate for a semester-length economics course that is part of the three years of required social studies instruction (.5 of 3 units).  Government is taught in the semester opposite to economics.  Some personal finance is included in the economics course.  Economics will be part of the social studies test used with other tests to rate school districts.

New York created a required course in “Economics and Economic Decision Making” and wrote a core curriculum for it in 1989.  The one-semester course is typically offered as a 12^th grade course and paired with a government course the other semester.  Economics accounts for one-eighth of the four years of required social studies instruction (.5 of 4 units).  In 2002, the New York State Department of Education changed the title and focus of the course to “Economics, The Enterprise System, and Finance.”  The redesigned curriculum gives about one-third of instructional time to each of three major topics—basic economic concepts, entrepreneurship and business, and personal finance.  School districts do not have to follow this core curriculum and instead have the flexibility to offer substitute courses, which can be more traditional economics courses.

Florida’s mandate for an economics course was established in 1974.  The semester course is offered in 12^th grade and matched in the other semester with a government course.  Economics represents one-sixth of the three years of required social studies instruction (.5 of 3 units).  The content covers basic economics with attention given to the topics of credit and economic systems.

As noted above there is relative uniformity in the length, grade level, and graduation credit for the economics courses across all four states.  What varies across and within states is how the economics course mandate gets implemented.  In terms of course titles, courses can be called economics, comparative economic systems, applied economics, the American economic experience, advanced placement economics (AP or IB), or something else so long as they can meet state standards or rules for courses.  Whether the course contains substantial economics content and is well taught depends on the economic knowledge and pedagogical skill of the teacher in a classroom.  Most social studies teachers, however, lack substantial coursework in economics.  They have often only taken one or two economics courses and are not confident in teaching the subject.  As with any mandate, many teachers will need assistance if they are to be successful in teaching a sound economics course.  Some of these states have provided temporary funding for teacher training in economics, but such funding has not been consistent.  State councils and centers for economic education have been critical for the successful implementation of state mandates for economics because they provide the necessary teacher preparation in economics for many teachers.

The research evidence shows that in those cases where high school students take an economics course from a well-trained teacher such a course does make a substantive contribution to the economic understanding of those students (Walstad, 2001).  Studies of test scores reveal that high school students who have taken economics score significantly higher than students who did not take such a course, and this knowledge has a lasting effect on economic literacy.  Further evidence on the value of high school courses in economics comes from college studies.  Students who have taken good high school economics are more willing to take a college economics course, perform better in college courses, and are more confident in their ability to learn economics.

The most important goal for improving economic literacy in the nation is to increase the number of students who take a high school course in economics.  The problem is that less than half of all high school graduates take such a course, so they often graduate without the essential economic knowledge and skills they need to understand and be successful in the economic arena.  High school enrollments in economics, however, are unlikely to rise unless there are new state mandates to get students into the economics classroom.  Once they are in the classroom, they have a great opportunity to learn the important economic content that will have a lasting influence on their lives and future success.

References

Dempsey, Joanne R.  2000.  Findings of the National Survey of Economic Education—2000.  New York:  National Council on Economic Education. 

National Center for Education Statistics (NCES), U.S. Department of Education.  2001a.  The 1998 High School Transcript Study Tabulations Report (NCES 2001-498e).  Washington, DC:  Government Printing Office. 

National Center for Education Statistics (NCES), U.S. Department of Education.  2001b.  Digest of Education Statistics.  Washington, DC:  U.S. Government Printing Office. 

National Council on Economic Education (NCEE).  1997.  Voluntary National Content Standards in Economics.  New York:  National Council on Economic Education. 

Siegfried, John J.  2000.  “How Many College Students Are Exposed to Economics?,” Journal of Economic Education, 31:2, pp. 202-04. 

Walstad, William B.  2001.  “Economic Education in U.S. High Schools,” Journal of Economic Perspectives, 15:3, pp. 195-210.