Economic Education Research Paper

1. Organizations

In the United States, the end of World War II sparked the creation of the Joint (now National) Council on Economic Education. In the 1950s, the Committee on Economic Education was created by the American Economic Association; both work to advance the teaching of economics within the United States and throughout the rest of the world. Numerous other organizations (e.g., Junior Achievement) raise and spend money worldwide in the name of economic education, although many have a public relations mission that goes beyond the teaching of economics as a social science and a means of analysis. Most of the developed countries including the former Soviet Union now have programs aimed at increasing the economic literacy (or specific economic issue awareness) of their citizens.

Within the United States, the organizations that advocate teaching economics at precollege levels were successful in getting economics included in the Goals 2000 Educate America Act as one of 10 subjects in which every student should demonstrate competence. This 1994 United States Government Act also specifies the goal that every US adult citizen will be sufficiently literate in economics to understand and compete in a global economy. Although endorsed by the United States Department of Education, these national disciplinary content standards are not mandates from the federal government. Unlike Australia, for example, where level 12 curriculum exams (which include economics) are mandated for all students, the United States standards are intended to be a resource that local school districts adopt voluntarily.

Beyond policy statements and getting economics into precollege curricula, documentation of the actual learning outcomes of these organized efforts has been and will likely continue to be mixed. For instance, opinion surveys from North America, Europe, and Australia suggest that respondents can identify economic principles in some contexts (e.g., international trade) but not in others (e.g., minimum wage legislation) (Anderson 1999). Rapid depreciation of knowledge and skills gained in economics courses also suggests that more than a few courses in economics are required if individuals are to ‘think like economists,’ which at least at the upper-secondary and tertiary levels is the primary goal of courses in economics (Siegfried et al. 1991, p. 199).

2. Content

Samuel Brittan’s seminal survey in Great Britain, ‘Is There an Economic Consensus?’ (Brittan 1973), provided evidence of the degree to which noneconomists bare thinking like economists by measuring the degree of agreement among the views of economists on economic issues and the views of a group of noneconomists. His comparison groups were academic, government and business economists, members of parliament, and journalists. His questions were drawn from secondary and tertiary multiple-choice tests: the Scottish Test of Economics Comprehensi e, prepared at the Esmee Fairbairn Economics Research Centre at Edinburgh’s Heriot-Watt University, and the National Council on Economic Education’s Test of Understanding in College Economics (TUCE).

In the 1970s, economic education researchers operated as if multiple-dimension learning outcomes could be measured validly and reliably by multiplechoice, fixed-response test questions. These standardized, advanced, secondary, and tertiary tests of economics typically include the textbook microeconomic concepts related to (a) scarcity and opportunity costs, (b) equity and efficiency, (c) cost, revenue, and profit maximization, (d) demand and supply analysis, (e) market structures, and (f ) market failures and externalities. The macroeconomic concepts include (a) national income accounting, (b) real versus nominal values, (c) investment and saving, (d) money demand (liquidity) and money supply, (e) aggregate expenditure (demand) and supply, (f ) stagnation and growth, and (g) monetary and fiscal policy. (The investment and saving, liquidity and money supply, and aggregate expenditure and supply framework found in tertiary economics textbooks is typically called the IS-LM-AS model.) Concepts from international trade and finance are treated on both micro and macroeconomic portions of these examinations (Saunders 1991).

Economic educators do not dispute the importance of the above macroeconomic concepts for those thinking of majoring in economics. Because so few students go on to become economists (Economists, doctored, 1998), however, the debate concerns whether the content in introductory or principles courses should be driven by the desires of those who teach more advanced courses. Unlike the mathmatically oriented economics required for more advanced study, the vocabulary of macroeconomics required for everyday life can be found in articles from the Economist, Business Week, the Wall Street Journal, and like publications. Kennedy (1992) provides the macroeconomic concepts that appear regularly in the news media but receive scant attention in textbooks and standardized tests. Kennedy’s five key relationships that have met the test of time are (a) the discouraged– encouraged worker phenomenon and changes in reported unemployment, (b) inventories and production forecasting, (c) nominal versus real interest rates in a variety of guises, (d) inflation rate differences and exchange rate changes (purchasing power parity), and (e) the loose tendency for real, but not nominal, interest rates to be equal across countries (interest rate parity).

Once past these basic macroeconomic relationships, the debate among macroeconomists comes to the forefront. For example, Mankiw (1990, pp. 1645–6) believes that ‘The IS-LM model, augmented by the Phillips curve, continues to provide the best way to interpret discussions of economic policy in the press and among policy makers.’ David Romer states that even though countless teachers, students, and policymakers have found the IS-LM-AS model a powerful tool for understanding the economy, it must be updated to reflect the reality of monetary policy in different countries (Romer, 2000). Romer’s reality, and also recent media headlines in the United States, place less emphasis on the money supply and more emphasis on interest rate rules.

Until macroeconomists settle the debate about the appropriateness of alternative models for macroeconomic analysis, students and their teachers of macroeconomics will be left to their own devices regarding the preferred method of analysis. Other than for definition and recall-type questions, economic educators can be expected to continue to have difficulty devising fixed-response, multiple-choice questions in this environment.

In microeconomics, Shapiro and Varian (1999) question the usefulness of concepts and nonrealistic textbook applications found on standardized multiplechoice tests. They argue that a brand new economics is not needed; instructors need only get past the concepts and ideas that no longer have much relevance in the information age. Becker (in press) summarizes those concepts and principles not covered or emphasized in principles and intermediate textbooks but which are emphasized by Shapiro and Varian (1999) in their analysis of the information industries: (a) bundling and complementarity, (b) experience goods and property rights, (c) signaling, screening, and selection, (d) expectations and risk, (e) switching costs and lock-ins, (f ) cost versus value-based pricing, (g) innovationversus price-based competition, (h) competition within and between standards, (i) demand and supply dependence, and ( j) network economies and externalities.

Competitive markets as described in textbooks adequately represent many markets (e.g., agricultural commodities, base metals, and similar primary goods), but they are not adequate for all items of interest to students. When quality depends on price (as in usedcar markets, insurance, and labor markets), equilibrium may be characterized by inequality between quantities demanded and supplied; identification and a neat separation of demand and supply curves may not be appropriate. Textbook discussions of rising supply curves are problematic when marginal costs are approximately zero, as is the case for many goods at the beginning of the twenty-first century.

To get clear of the concept-laden approach to teaching economics, the national disciplinary content standards developed as part of the United States Department of Education Goals 2000 project attempt to avoid the rhetoric employed in microeconomics (e.g., economies of scale, elasticity, diminishing marginal returns) and the controversies of macroeconomics. An attempt is made to make the language of economics accessible by 95 percent of high-school graduates (Siegfried and Meszaros 1998, pp. 143–4). In the process, however, the committee writing the standards may have made the standards so simple that they are of no practical use (Pennar 1997). Economic educators are struggling with the problems of changing the focus of examples to capture current situations better, and adapting analytical techniques to fit those examples in a meaningful way. In early 2000, however, there is no universal agreement on what knowledge, skills, and abilities are required to be economically literate.

3. Methods Of Teaching

The Report of the Commission on Graduate Education in Economics calls for bringing ‘real-world issues into the classroom’ (Krueger et al. 1991). However, the Commission’s assumed instructional mode is lecture. It concludes that the lack of emphasis on exposition skills is at least in part ‘a judgment that the appropriate style of professional communication is something (graduate) students can figure out for themselves by watching their teachers’ (p. 1049). The report of a committee of economics faculty members from prestigious liberal arts colleges in the United States (Kasper et al. 1991) emphasizes the need for graduate students to have breadth in content coverage to become good teachers of undergraduates, but it gave no attention to the need for breadth and training in teaching methods.

Until the late 1990s, economists paid little attention to teaching methods even though the American Economic Association’s Committee on Economic Education had been active since the 1950s. Academic economists spoke of ‘exposing’ students to concepts and ‘imparting’ knowledge. For the transmittal of factual information and demonstrations of mathematical and graphical constructions, the lecture and blackboard were the simplest delivery modes and teachers of economics used little else (Becker and Watts 1996).

Some circumstantial evidence suggests that declining numbers of economic majors at the tertiary levels in the 1990s led academic economists to devote more time and energy to teaching. For example, Becker (2000) reports that at the 1999 Allied Social Science Association meetings in New York, 12 sessions focused on the teaching of economics, ranging from Nobel Laureate Paul Samuelson’s principles textbook to faculty advisors dealing with student apprehensiveness about economics. At the 1998 ASSA meetings in Chicago, 14 sessions were devoted to teaching economics, including one headed by Nobel Laureate Ronald Coase on teaching business economics. As recently as 1996, the San Francisco meetings listed six sessions, and the January 1994 Boston meetings had four sessions on economic education, with similar small numbers in the 1980s.

Along with other educators, economic educators are now seeing the importance of small classes that require in-class interaction (Benzing and Christ 1997). The student: teacher ratio is the most important constraint in the teaching and learning process because two-way communication becomes increasingly difficult as class size increases (Rosen 1987). In small classes, each student has an opportunity to get to know and communicate with the teacher and fellow students. Emphasis can easily move from the teacher exposing and imparting knowledge to students doing economics.

Numerous activities have been developed by economic educators to get students actively involved in the classroom. Becker and Watts (1996) and Keenan and Maier (1995) describe many of these activities that can be used in the teaching of economics. For example, a ‘think, pair, share’ classroom activity is a cooperative learning method that might be initiated by having students think about the best way to describe the incidence and length of economic expansions in the United States since World War II. Next, they are required to ‘pair up’ with neighboring students and compare, discuss, and refine their answers. Finally, one member shares the team’s responses with the class if asked to by the instructor. The think, pair, share activity requires only a few minutes, but provides a break in standard lectures by involving students and it allows instructors to assess quickly, and on a regular basis, what students are learning.

Students are not alike in their willingness to get involved in classroom group activities. Cooperative classroom learning experiences can require large amounts of time. As long as decisions outside the classroom are made on an individually competitive basis, students may choose to perform individually in the learning environment as well. Instructors in economics are now expected to employ alternative teaching strategies—strategies that can keep students actively involved, with both practice and feedback. Researchers in economic education have found that technology can complement traditional classroom activities (Agarwal and Day 1998). As demonstrated by the exponential growth in the number accessing the Journal of Economic Education World WideWeb site, and the creation of the ‘Online’ section of that journal, economists are increasing their use of the Internet in their teaching. At the tertiary level departments of economics are exploring ways to offer courses via the Internet. However, unless computers and other high-tech systems can replace the instructor and support personnel, their introduction always adds to the cost of instruction.

Replacing the instructor with technology that adapts to the needs of individual learners is a dream that no instructional developer has come close to achieving. Physical capital may be a poor substitute for human capital in economic education. Rosen (1987) observed that no major innovation in education has occurred since the printing press made inexpensive book publication possible. Higher education is a major contributor to technological advances elsewhere in the economy, yet practitioners in higher education appear to be unable to capitalize on this technology in teaching. The World Wide Web may lead to changes in educational practices, but it is too early to say much about the effectiveness and efficiency of Internet tools in teaching economics.

The speed with which economists embrace new technologies in teaching and participate in the scholarship of teaching depends on individual interests, monitoring methods, reward structures, and market forces. In a search for the best of these technologies, economic educators have learned that the conclusion of Siegfried and Fels (1979, p. 953) still holds: ‘Different students learn economics in different ways. The best teaching strategy provides alternative learning methods.’

4. Assessment Of Teaching And Learning

Assessment of teaching and learning in economic education is of two forms: formal quasi-experimental work aimed at publication and informal classroom review of students and teachers.

4.1 Quasi-Experiments

Rendigs Fels provided the impetus for quantitative analysis of teaching techniques in economic education with his 1969 Presidential Address to the Southern Economic Association, ‘Hard Research on a Soft Subject: Hypothesis Testing in Economic Education.’ Until the 1990s, researchers typically specified a multiple-choice score, or the change in scores from the beginning to the end of the course, as the dependent variable produced by human capital inputs (pre-knowledge of economics or some other subject, grade points, previous courses of study), utilization measures (time spent by student or teacher in given activities), and technology, environment or mode of delivery (lectures, group work, computer use).

Of all the variations in outcome measures and models considered, Becker (1997) concluded that the only variables that consistently appear as significant and meaningful explanatory variables of the post-course scores are the preaptitude measures, such as the precourse test scores. There also is some work that suggests the qualifications of the teacher, math skills, prior exposure to economics, gender, and type of teacher and student interaction are important in explaining success in tertiary economics courses. However, there are major problems with the input–output approach on which economic education research is based.

First, production functions are only one part of a student’s decision-making framework. Observed outcomes are the result of the entire decision-making process, and each student’s learning goals and process may be different. Second, data loss and the resulting prospects for sample selection bias in the standard learning model design are tremendous, with 20–40 percent of those taking the precourse tests not taking the post-course tests. Third, from statistics we know that failure to reject the null hypothesis does not imply its acceptance. That an experimental program shows no statistical significance over the control does not imply that the experimental and control programs have equal effects. Finally, and possibly most important, education is a multiproduct output that may not be reflected in a single multiple-choice test score. In the 1990s, economic education researchers began to build models and employ estimation techniques aimed at overcoming these problems in testing for learning effects. These developments are discussed in Becker (1997), with new findings typically published in the Journal of Economic Education.

4.2 Classroom Assessment Of Students

Within the United States, fixed-response, multiple-choice tests are a staple of assessment in economics, especially at the principles level. In most of the rest of the world, even at the principles level, free-response questions are the norm. An often-asked but unanswered question is whether the added cost of grading essays, reports, term papers, and the like is worth the information gained by students, instructors, and their institutions. In large enrollment principles classes, cost considerations require the use of multiple-choice tests, but this does not imply that they cannot be used creatively to get students involved and interacting with each other. For example, after a quiz has been machine scored, and returned to students, the instructor can have students interact with those sitting around them to determine the correct answers—a frenzy of activity ensues. After several minutes, the room is quieted and each student is allowed to resubmit a new answer sheet for partial credit.

Individual multiple-choice questions have also been used outside an examination setting to stimulate student interaction in class. For example, a single multiple-choice question can be projected in a traditional large lecture hall. Each student answers the question on a sheet distributed in the classroom. For a second question, each student marks ‘A. Certain’ to ‘E. Doubtful’ to indicate confidence. Students then discuss their answers with neighbors—the lecture hall is abuzz. After a few minutes, students continue the process with question three (a repeat of question one) and final confidence given in question four (a repeat of question two). Student attendance and participation increase with the use of this activity, if students get some credit for attempting answers, as well as for the correct answer to number three, when responses are scanned and machine scored. The instructor also gets feedback on student confidence in what they are doing.

From Harvard seminars on college teaching, Light (1990, 1992) reported on the subjects students respect and from which they learn most. The crucial features are immediate and detailed feedback, with frequent points of assessment, and high demands and standards but with ample opportunity to revise and improve work as part of the grading process (i.e., learning from mistakes). Students also claim to learn from the reinforcement of their peers. Multiple-choice tests are crude instruments for assessing student learning but, as already illustrated, they can be used in educationally sound ways. Allen Kelley’s TIPS program (Kelley 1973) was innovative in the early 1970s and its principal components (frequent multiple-choice testing in large classrooms with immediate detailed feedback) are easily implemented by anyone with access to machine scoring. It is especially attractive to anyone teaching in a small computer laboratory where assessment material can be delivered directly and uniquely to each student in the class, as I am doing in my teaching of business and economics statistics. In a large high-tech auditorium, where each student’s response on a keypad can be monitored by the instructor, software programs permit rapid display of responses and their distribution, offering instructor and students immediate checks on learning.

Especially outside the United States, as already noted, there is a belief that no matter how they are delivered, multiple-choice questions are inferior to questions in which students construct their own responses. But within the United States, the perception is that they measure the same thing (Hansen 1998, p. 83). Walstad and Becker (1994, p. 196), for example, reported in their study of the Advanced Placement examination in economics (administered to selected twelfth graders in the USA) that ‘the coefficients of correlation for the multiple-choice score and the essay score were relatively high (0.69 micro and 0.65 macro), … consistent with previous studies that found no difference or only slight differences, in what the two types of tests and questions measure.’ Becker and Johnston (1999), however, point out that a correlation coefficient of 0.69 implies that only 48 percent of the variability in scores on one set of fixed-response (multiple-choice) or construct-response (essay) questions is explained by the other.

More importantly, once account is taken of the measurement error and simultaneous relationship that exists between scores on essay and multiple-choice components of an exam, the Becker and Johnston two-stage least-squares estimates demonstrate that they measure different dimensions of student knowledge. Hence it is important to use both forms of testing and not to abandon essay questions in favor of the multiple-choice form or vice versa. Second, females do not seem to be disadvantaged by multiple-choice questions, although they may have an advantage at essay writing, again suggesting that no one form of test should be employed. Economic educators such as Hansen (1998, p. 83) now suspect that tests with all essay response questions, or the exclusive use of multiple-choice response questions, must be avoided in the assessment of economics.

4.3 Assessment Of Teachers

In economics departments at colleges and universities in the United States, there is an almost exclusive reliance on end-of-semester student evaluations of teaching (SET) as the measure of the instructional product (Becker and Watts 1999). That ‘the primary purpose of the common end-of-course evaluation form is to provide comparative data for administrators … ’ (Walstad and Saunders 1998, p. 339) is troubling. Typically SET scores explain less than 50 percent of the variability in other teaching outcomes (e.g., test scores, scores from trained classroom observers, post-course reviews, etc.). Thus, when administrators use SET scores to compare individual instructors against an average, they are condemning half of their teachers based on a suspect instrument. Teachers (agents) can be expected to respond to SET and, even if inappropriate, adjust their behavior in accordance. For that reason, there are principal-agent problems associated with end-of-semester SET.

Unfortunately, the SET forms used in economics usually ask few questions that deal with what education specialists say is important: active student learning and group (or collaborative) learning. Furthermore, although academic economists call for the use of better applications and examples in teaching, these items are among the least-often-asked questions on SET. Although there is lip service about implementing new technology in teaching economics, questions about the use of technology are rare on SET forms. The teacher’s overall effectiveness, communication skills, organization and planning, and knowledge of material are among the top four items on which student opinion is sought (Becker and Watts 1999). These items, however, fail to address what instructors can do to improve teaching. An instructor interested in improving the learning of his or her current students needs feedback before a semester is nearly over. Questions asked of students must elicit responses that suggest a desirable change in instructor behavior. They need not be of the standard SET type.

In addition to my participation quizzes, similar classroom checks on student understanding such as the ‘minute paper’ provide a proven framework to assess what students are and are not learning during the course (Chizmar and Ostrosky 1998). The minute paper is typically assigned in the last minutes of each class when maintaining student attention is difficult. Each student is required to respond to two questions: (a) what was the most important thing you learned in class today? and (b) what question is unanswered? Although answers may or may not be graded, these written responses can be used to monitor both comprehension and attendance. It is only one of many vehicles for monitoring the process of education from the start of a course to its termination, which fits well with the industrial model of total quality management. On resident campuses with ample computer facilities and programming staff, electronic technology makes periodic assessment easy. Students need not complete assessment instruments in a classroom; they can complete questionnaires at their leisure sitting at terminals. Students can be required to complete the periodic questionnaires as part of a course requirement. If the unit processing the forms is independent of the instructor, individual student responses can be associated with the student or reported anonymously to the instructor.

Classroom observation, peer review of teaching materials, and subsequent student enrollments and student behavior in subsequent economics courses are some alternatives to SET, but these are not being used in the evaluation of teaching in economics (Becker and Watts 1999). For example, peer review of teaching is used by only 37 percent of the United States economics departments at research universities and by 52 percent of the baccalaureate institutions, as defined by the Carnegie Foundation for the Advancement of Teaching. Wherever peer reviews are employed, the Department Chair typically appoints the evaluators. Classroom observation is the most common form of peer review of teaching. Evaluators also examine course syllabi, instructional materials, and examinations. Few departments in the United States ask evaluators to consider student drop rates, although some give attention to grade distributions.

5. Conclusion

The scholarship of teaching economics is diverse. It encompasses the organizations advocating and delivering economic education. More importantly, it provides a body of knowledge and views regarding what is and should be taught, how it is and should be taught, its assessment and evaluation with regard to student learning and attitudes, and teacher performance in generating those changes in students.

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