Eight out of 10 high school seniors understand economics basics, but less than half are deemed proficient in a first-ever test.
Fresh out of high school, how many American students understand the basic economic forces at work in their own wallets or their country's trade policies?
For the first time, national test scores have revealed what 12th-graders know about economics and personal finance. The results aren't likely to set off the same kind of alarm bells triggered by national tests on reading and math, but observers also see plenty of room for improvement.
Seventy-nine percent of a nationally representative sample scored at or above a basic level – meaning they could understand and apply a limited set of economic concepts relating to microeconomics, the national economy, and, to a lesser extent, the international economy. Forty-two percent scored "proficient" or above, because they could analyze a wider range of economic issues; 3 percent were "advanced."
"The Nation's Report Card: Economics 2006" was released Aug. 8 by the US Department of Education's National Assessment of Educational Progress (NAEP).
The proportion of students at each performance level are as good or better than other subjects tested by NAEP, "so I would say that's encouraging," says Darvin Winick, chair of the National Assessment Governing Board, which sets NAEP policy.
"Obviously we'd like to see them better," he says of the scores, but he's also heartened that "the number of students that report having some kind of exposure to economics or finance is quite high" – about 8 out of 10 seniors. This test is the first in what will be a series that can show if there's progress over time. Timing for the next economics test depends on federal funding, but it is scheduled for 2012.
Advocates of economics education see a less rosy picture.
"If you have less than 90 percent [at the basic level] it's a warning," says Robert Duvall, president of the National Council on Economic Education (NCEE), an advocacy organization in New York that has coordinated training and curriculum resources for teachers since 1949. (He spoke with the Monitor before he had access to the results, which were officially released at press time.)
"Our goal is that 100 percent of our students would have a basic understanding ... and that at least half the students would [be] advanced.... Otherwise, they are at a disadvantage as workers and consumers and voting citizens," adds Mr. Duvall, whose group produced voluntary economics standards in the 1990s and had a say in the content of the new NAEP test.
For some policymakers, the score gaps between different groups (similar to gaps in other subjects), are yet another sign of social and educational inequities at play.
While 87 percent of white 12th-graders scored basic or above in economics, only 57 percent of African-Americans and 64 percent of Hispanics did. In addition, 44 percent of Asian/Pacific Islander students scored proficient or above, compared with 26 percent of American Indian/Alaska natives, 21 percent of Hispanics, and 16 percent of African-Americans.
Another notable gap: Of students whose parents did not finish high school, 59 percent scored basic or above, compared with 87 percent of those with at least one parent who had graduated from college.
The gaps indicate that "high school students – low income students and students of color in particular – are not getting the preparation they need to meet the demands of college and the workforce," says Daria Hall, assistant director for K-12 policy at the Education Trust in Washington, a group focused on closing achievement gaps.
The portion of students taking an economics class has been on the rise – from 49 percent in 1982 to 66 percent in 2005, according to a study of high school transcripts cited in the NAEP report. In another measure, a survey of the 11,500 students taking the NAEP test (in both public and nonpublic schools), 55 percent reported taking a general or advanced economics course; an additional 23 percent had had business, personal finance, or economics lessons in other courses.
"Students are doing what we're asking of them: They are signing up for these more rigorous courses, they're getting better grades, and yet ... [in some courses] the content and the quality of instruction do not actually support the knowledge and skills students need," Ms. Hall says.
The test looked at several areas. In a section on the market economy, or microeconomics, 72 percent of students were able to name and describe one benefit and one risk of someone leaving a full-time job to further his education. But less than half (46 percent) could interpret a supply-and-demand graph to determine the effect of establishing a price control. In a section on the national economy, 60 percent could identify factors that lead to an increase in the national debt, but only 11 percent could analyze how a change in the unemployment rate affects income, spending, and production.
For Bruce Damasio, a high-school economics teacher in Towson, Md., and president of the Global Association of Teachers of Economics, "the good news is that economics has now been brought up to the big-league status." Because it's being tested like other subjects such as math and history, educators have a chance to see what needs to be done to bring more students up to proficiency.
One basic task, he says, is to help teens overcome their notion that studying economics is like having to eat broccoli. "They're afraid of it, but they do it all the time," Mr. Damasio says. "They don't realize they're using economic logic when they make decisions," whether it's using a debit card or judging the opportunity costs in choosing a college.
"Once it's put in practical terms, they get it."