Social Education 72(7), pp 359–362 ©2008 National Council for the Social Studies Social Studies Disciplines Economic and Financial Education for the 21st Century
Mark Schug and Jane Lopus
The Partnership for 21st Century Skills places an important emphasis on funda- should be produced and which mental social science subjects including history, geography, government and civics, should not; and economics as well as a stress on other important subjects such as English, foreign • Reduced trade barriers and the languages, arts, and science in the school curriculum. It has also identified what it calls expansion of international trade; 21st century themes, which include global awareness; financial, economic, business and entrepreneurial literacy; and civic literacy. The message is clear: young people • Maintaining a limited economic role cannot effectively participate in the global economy without a deep understanding of government so that the vast major- of basic economics. In fact, the success of the economic system of the United States ity of economic choices are made by and its trade partners depends to a large extent on young people understanding its producers and consumers. basic characteristics. Nations that have created legal and The Basics in Economics of which discourages market activity— financial institutions that strengthen What substantive economic understand- generating the income and resources these characteristics have experienced ings might be the most important for necessary to confront deep social issues. widespread economic success. Hunt- young people to have in the 21st cen- Yet when these nations embrace mar- Ferrarini and Schug have explained how tury? We believe that young people kets and generate wealth, things begin the Constitution of the United States pro- need an understanding of how market to change. vides important protections of private systems decrease poverty and produce So, what are the characteristics of ownership and free trade and how these, wealth. People have been writing about those nations that are able to achieve in turn, helped to produce wealth.1 the importance of wealth creation since high levels of wealth? It’s not much of The opposite is also true. Nations the days of Adam Smith. But merely a secret. Wealthy nations—even those that ignore these characteristics have because the topic gets a lot if discus- with vast differences in history, geog- impoverished their people. Let’s take sion, doesn’t mean it is not an important raphy, and culture—share certain insti- North and South Korea as an example. starting point for economic education. tutional characteristics. Among these Here are two peoples who had a com- Wealthy nations have many advantages characteristics are: mon, independent country from the over poorer nations. When people have seventh century until the 20th century. higher incomes, these individuals are less • Vigorous protection of private own- They share a common history, culture, dependent on government and are able ership; homogeneous ethnic composition, simi- to exercise more political and economic lar geography, and the same language. freedom. Market economies produce • Widespread competition among pro- Yet today the economy of South Korea income that allows private sector and ducers; is nearly 14 times larger on a per capita public sector institutions to accomplish • Use of the profit motive to engage basis than the economy of North Korea. important social goals including provid- producers to voluntarily produce As of 2007, the economy of South Korea ing high quality health care, improv- the goods and services desired by had a GDP of more than $1 trillion and ing the environment, reducing poverty, consumers; a per capita income of $24,500. It now investing in socially important research, ranks among the wealthiest nations in improving education, supporting the • Respect for consumer sovereignty— Asia. In contrast, North Korea has a GDP arts and so forth. It is hard to imagine consumers are the final authorities of $40 billion and a per capita income the world’s poorest economies—each regarding what goods and services of $1,800. It ranks among the poorest
N o v e m b e r /De c e m b e r 2008 359 nations of the world. Producing a high world’s most centrally planned economy. government plays a larger role than in per capita GDP is usually associated The government dominates nearly every many western market economies, most with other important social outcomes. economic decision. Price controls cause decisions are made privately by pro- For example, the infant mortality rate is chronic shortages of all sorts of goods ducers and consumers. South Korea is nearly four times higher in North Korea and services. It has isolated itself from heavily involved in international trade. than in South Korea. South Koreans live international trade. Its collective farms Living standards now resemble those longer than North Koreans. have failed. North Koreans now suffer of many Europeans—a big change since Why do these dramatic differences from prolonged periods of malnutrition the 1960s. And South Korea is not alone. exist? North Korea decided after World and poor living conditions. Hong Kong embraced market principles War II to eschew the principles of mar- South Korea took a different path. sooner and has established a very high ket economies and instead embraced a It embraced the basic institutions that standard of living. Similar policies were command system. Today, it is perhaps the make up a market economy. While the followed by the nations that emerged from communism, such as Poland and Estonia. Nations such as New Zealand and Ireland have reduced many non- market forces in their economies by low- ering trade barriers and reducing taxes and have generated an amazing increase in wealth. Today, of course, the fastest growing economies are India and China. China and India are lifting millions of people out of poverty by adopting poli- cies consistent with many of the basic principles of market systems.
What Works in Economic Education? While looking toward economic and financial education for the 21st century, it is interesting to note that economics is marked by a general agreement on the main topics to be studied. This con- sensus is apparent when observing the similarities in the content and format of current leading college and high school textbooks, most of which are written by university economics professors. In a recent paper investigating the high school economics textbook market, Leet and Lopus find that all of the 11 textbooks in the study cover most of the Voluntary National Standards in Economics published by the National Council on Economic Education.2 Created by a group of economic educators from diverse organizations, the twenty stan- dards represent the important ideas that students should learn from economic education in grades 1-12. The textbooks written for general high school audiences also exhibit a large degree of uniformity in the content order of the chapters and the reference materials included.
S o c i a l Ed u c a t i o n 360 Despite the broad agreement about While one must be cautious in com- For example, while nearly everyone is topics to be covered in high school paring the NAEP results in economics expected to share the duty of teaching economics classes, economists exhibit to the performance of students on other U.S. history, we suspect that only one or much more agreement with respect to tests, this level of achievement was much two teachers take special responsibility microeconomics than macroeconom- higher than the levels attained in history, to teach economics. ics. Microeconomics is based on widely geography, or civics. What accounts for agreed upon assumptions and outcomes this relatively positive outcome? We don’t Getting Ready for the 21st involving incentives and marginal analysis know for certain. We suspect, however, Century in individual markets. Macroeconomics, that it may be the result of widespread The world is becoming increasingly inter- on the other hand, delves into areas where agreement regarding what economics dependent as people, businesses, and gov- evidence is less conclusive such as the effi- concepts are most important to teach. ernments are more integrated with those cacy of active versus passive stabilization We also suspect that economics teachers of other countries. This globalization, a policies. We simply do not know as much might be more specialized within social result of opening up trade and markets, about macroeconomics as we would like— studies departments at the high school. provides enormous opportunities for leading to widespread debates and leading different economists to reach different conclusions. What Should Economics Teachers Do to Prepare? Fortunately for economic educators, there is a wide body of both quantitative Resources and qualitative studies investigating the teaching and learning of economics at the Fortunately there are many resources available to help teachers prepare to teach college and the precollege level. The pre- economics. Here are some of our favorites: The National Council on Economic Education (www.ncee.net) publishes quality, college literature is summarized in a paper classroom-tested supplementary materials for use in K-12 classes with a focus on by Michael Watts of Purdue University.3 lesson plans. Virtual Economics 3.0 contains more than 1200 activity-based eco- Economic education studies point to the nomics and personal finance lessons from 80 separate NCEE publications on one importance of teacher education: teachers CD-ROM. Teachers can search for lessons by concept, grade level, or by state and who know more economics have students national standards. Virtual Economics also contains an extensive economics glossary. For those who prefer print versions of lessons, we recommend NCEE’s “Great High who learn more economics. Time spent School Economics Package,” which contains three publications of lessons for teach- teaching and quality of materials are also ing high school economics important. Students learn more economics For personal advice and workshops on teaching economics, we recommend that in formal economics courses than when you contact your local Center or Council for Economic Education. A list of Councils the content is infused in other courses. and Centers affiliated with NCEE may be found at www.ncee.net/network/. See also However, taking one high school course workshops and materials available from the Foundation for Teaching Economics (www.fte.org) and from the Liberty Fund. The Liberty fund has an online Library of in economics does not ensure long-term Economics and Liberty (www.econlib.org.) knowledge retention or necessarily qualify There are many great websites with information for high school economics. Each the student as economically literate. Federal Reserve Bank is a source of information for teachers and students. For exam- After many years of advocating for ple, see the website of the St. Louis Fed for six stand-alone lessons on the Great improved economic understanding, we Depression (www.stlouisfed.org/greatdepression/) and Liber8 (liber8.stlouisfed.org/), a portal of reference information for students, teachers, and librarians. For other sites can now point to some important suc- with multiple links, we like the website of the Center for Economic Education at the cesses. Late in 2006, the first National University of Nebraska, Omaha (ecedweb.unomaha.edu/k-12/home.cfm) and
N o v e m b e r /De c e m b e r 2008 361 the majority of people in both rich and and workers benefit from increased pro- ning of the twentieth centuries. These poor trading nations. Therefore it is prob- ductivity and opportunities, it is often beggar-thy-neighbor policies were causes lematic that polls indicate that most U.S. the displaced workers who command the of both political and economic instabil- voters believe that trade with other coun- political attention. However, increasing ity. Increased globalization has existed tries is hurting the American economy.4 trade barriers in the name of protecting since the 1950s and has led to increased Economic educators must change these inefficient industries is not the solution wealth throughout most of the world. We opinions by teaching 21st century students to this dislocation. Displaced workers, do not want to repeat the mistakes of the about the overall benefits of opening up often in manufacturing, can be retrained last century in the 21st century by increas- trade. In addition to overall benefits to to work in areas with increased demand, ing trade barriers. Americans, increasing trade between rich often in services. Innovation and entrepre- The Partnership for 21st Century and poor nations is necessary to bring the neurial opportunities can expand jobs for Skills has correctly acknowledged that people of poor nations out of poverty. workers: Who would have imagined the issues surrounding financial education The law of comparative advantage, number of jobs that would be created in have changed over the past several years. the basis for free trade, concludes that technology 20 years ago? Educating the Individuals have increased responsibility free trade is mutually beneficial so long workers of the 21st century with improved for managing their finances than they did as countries specialize in producing the mathematical and scientific skills, along 25 years ago. Writing in Social Education goods and services where they are com- with improved knowledge in economics in 2005, John Morton argued that while paratively more efficient. But from a politi- and other areas, will allow our workforce advocacy on behalf of increased financial cal perspective this can be problematic to adapt to the challenges of change and education has increased, there has been because some people do not benefit in competition. Education, not protection- little actual change in the curriculum the short run. Increased international ism, is the solution. and levels of financial literacy remain competition creates a threat to U.S. com- History provides important lessons on low. He suggests that one reason for panies and workers who lose sales and globalization and free trade. Between the this result is that financial education is jobs to foreign businesses and workers. two world wars, flows of people, capital “homeless”—it has no natural place in the Although U.S. consumers benefit from and trade were greatly restricted com- school curriculum—and that economics lower prices and other U.S. businesses pared to the late nineteenth and begin- is the logical home for personal finance education because it is a discipline that is widely accepted as a core subject within the K-12 curriculum.5
Notes 1. Tawni Hunt-Ferrarini and Mark C. Schug, “History Matters: An Institutional Approach Examination of the U.S Constitution,” Social Education 71, no. 2 (2007): 57-60. 2. Don R. Leet and Jane S. Lopus, “Ten Observations on High School Economics Textbooks,” Citizenship, Social and Economics Education: An International Journal 7, no.3 (2007): 201-214; National Council on Economic Education, Voluntary National Content Standards in Economics (New York, NY: National Council on Economic Education, 1998). 3. Michael Watts, What Works: A Review of Outcomes and Effective Program Delivery in Precollege Economic Education, Monograph (New York, NY: National Council on Economic Education, 2005). 4. “Trade and Prosperity,” Editorial: The New York Times (December 23, 2007). 5. John S. Morton, “The Interdependence of Economic and Personal Finance Education,” Social Education 69, no. 2 (2005): 66-69.
Mark Schug is professor emeritus and associ- ate director at the University of Wisconsin-Mil- waukee’s Center for Economic Education. He can be reached at [email protected]. Jane Lopus is professor of economics and director of the Cen- ter for Economic Education at California State University, East Bay. She can be reached at jane. [email protected].
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