Making the case why all college students need to take a basic course in Economics

1. MAKING THE CASE FOR BASIC ECONOMICS BEING
REQUIRED OF ALL COLLEGE STUDENTS:
THE LINK BETWEEN ECONOMIC KNOWLEDGE
& INFORMED VOTERS: AN EXPLORATORY
EMPIRICAL STUDY
DON DAAKE, OLIVET NAZARENE
UNIVERSITY
K AT H L E E N M AY S , E A S T T E X A S B A P T I S T
UNIVERSITY
PAUL KOCH, OLIVET NAZARENE
UNIVERSITY

2. 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 ?

3. 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.

4. 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!

5. 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.”

6. A BRIEF HISTORICAL PERSPECTIVE
THE LINK OF ECONOMICS TO A DEMOCRATIC SOCIETY
Leamer 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.

7. FURTHER COMMENTARY ON STATE OF
ECONOMICS EDUCATION
The 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.

8. 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.

9. 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.

10. 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!

11. PROPOSED MODEL

12. 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.

13. 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”

14. 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.

15. 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!?!

16. 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!

17. 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.

18. 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.

19. 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.”

20. 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!”

21. 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.

22. 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

23. 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

24. KNOWLEDGE BASED QUESTIONS - EXAMPLES
2. 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.

25. OPINION BASED QUESTIONS - EXAMPLES

26. OPENED ENDED QUESTIONS

27. KEY RESULTS

28. KEY RESULTS

29. KEY RESULTS

30. TOTAL NUMBER CORRECT 18 TOTAL

31. MEAN CORRECT BY SUB GROUPS
Overall mean
Gender Male & Female
9.26
9.73 vs. 8.69*
Business vs. Non Business
9.62 vs.8.69*
Economics course vs. no course
9.43 vs. 8.78

32. 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**

33. SOMEWHAT SURPRISING LACK OF DIFFERENCES ON
QUESTION BY QUESTION BASIS
Group comparisons
Number of
Comment
significant
differences on
question by question
basis
Economic courses vs.
no economic courses
2
Business vs. NonBusiness
3
Male vs. Female
4
Surprising results!
Could be based on
major- but generally
little differences

34. A NOTE OF CONCERN ABOUT PESSIMISM..
TEMPORARY OR THE NEW NORMAL?

35. WHEN ASKED ABOUT THEIR VIEW GOING FORWARD STUDENTS
WERE PERHAPS UNDULY PESSIMISTIC..

36. 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

37. 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

38. LIKELY TO VOTE..

39. OTHER INTERESTING RESULTS
Can they correctly identify current vice-president of the United States

40. CAN YOU NAME YOUR U.S. SENATORS?

41. SAY WHAT? CONGRESSMAN WHO?

42. 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 WalMart’s annual profit?
In terms of days: ___________Total Days

43. 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?

44. OR ANOTHER WAY WE SOMETIMES PUT IT– THE
SEARS TOWER (WILLIS) ANALOGY PER DAY!!

45. 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? ____________%

46. 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?

47. SOME SURPRISING OR PREDICTABLE RESULTS?

48. SOME SURPRISING OR PREDICTABLE RESULTS?

49. SOME SURPRISING OR PREDICTABLE RESULTS?

50. SOME SURPRISING OR PREDICTABLE RESULTS?

51. SOME SURPRISING OR PREDICTABLE RESULTS?

52. SOME SURPRISING OR PREDICTABLE RESULTS?

53. SOME SURPRISING OR PREDICTABLE RESULTS?

54. 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. nonbusiness students
Economics needs to be heavily integrated into
virtually all business courses.

55. 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

56. 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.

57. 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.

58. 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.

59. 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: Malefemale 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.

60. QUESTIONS, COMMENTS, CRITICISMS, STONES..

61. PROPOSED MODEL