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Promoting Economic Literacy in K-12 Schools

by Anand R. Marri - April 11, 2014

This commentary advocates for the promotion of economic literacy to help foster an active and engaged democratic citizenry.

Do undocumented residents cost the American taxpayer money by using government services for which they have not paid, or save the taxpayer money? Do undocumented workers take American jobs by accepting low wages, or do they create jobs by stimulating the economy through their economic activity? These dueling assertions, accompanied by a forest of data, are grist for the media mill.

Democracy relies on informed citizens. However, even those who follow the news consistently and actually read over all of the “conclusive data” might be mystified. They may have seen the data, but are unable to make critical sense of it. Ninety-five percent of Americans can read and write, but an overwhelming majority of them do not have the knowledge and skills to be economically literate.

Economic literacy is the ability to identify economic problems, alternatives, costs, and benefits; analyze the incentives at work in situations; examine the consequences of changes in conditions; collect and organize evidence; and weigh costs against benefits (North Central Regional Educational Laboratory, 2003). It also involves a deep understanding of the numbers that drive public policy and the ability to make informed choices in our personal lives. Because economic literacy is a measure of whether people understand the economic forces that significantly affect the quality of their lives (Stern, 1998), it increases their chances of being self-reliant and fully independent, even when they face the duress of very limited personal resources and a difficult economy. But as fully independent as we want young people to be, we want them to also understand how deeply rooted their freedoms are in inter-dependence. When they go to the polls, we want young people to be sufficiently literate to understand that their own economic well-being is strongly connected to the well-being of the nation as a whole. As such, economic literacy improves citizens’ ability to comprehend and evaluate critical macro and micro level issues, which is especially important in democracies that rely on an active and informed citizenry (Becker, 2000; Stigler, 1970; Walstad, 1998).

At the macro level, economic illiteracy compromises the ability of Americans to fulfill their civic responsibilities. Most Americans would not be able to parse the numbers offered as proof of the variously described impacts of immigration. Further, when confronted with multiple and competing statistics, most Americans may not be able to make an informed decision based on the numbers themselves or ideologies behind the statistics. For example, does an increase in visas for high-skilled workers improve or hurt the economy? What about the creation of new visa programs for low-skilled workers such as janitors, construction workers, and farm workers? As a result, most Americans would not be able to analyze public policy options, nor engage in a fully informed discussion of those policy options. They would not be able to reliably represent their own best interests among public policy choices, and they would not be able to identify those decisions that best serve the public good.

At the micro level, economic illiteracy means many Americans would not make decisions about their personal finances that would increase their chances of maintaining the level of material comfort a lifetime of hard work should guarantee. Given the opportunity, Americans are good at working hard. However, they are less successful at saving. More than a third of Americans have less than $1,000 in savings (Helman, Copeland, & VanDerhei, 2012). Further, twenty nine percent have not saved for retirement. Stagnating, or even shrinking, middle-class wages should be credited with causing much of this problem, but it is also true that many Americans do not understand basic concepts of saving, particularly over the long term.  They do not understand the powerful concept of compound interest, and a stunning 21 percent of individuals surveyed – including 38 percent of those with income below $25,000 – reported that winning the lottery served as "the most practical strategy for accumulating several hundred thousand dollars" of wealth for their own retirement (Consumer Federation of America and The Financial Planning Association, 2006). In addition, 16 percent thought that winning the lottery was the best retirement strategy for all Americans, not just themselves (Gale & Levine, 2010).

Some of these misunderstandings should be attributed to a corollary weakness among Americans in numeracy itself. However, few understand the economic concepts essential to navigating day to day dilemmas or sorting through the vast amount of data generated by public policy debates to find the numbers they can rightly trust. These economic blind spots are particularly acute among young people—among high school age students who are on the cusp of increased independence, if not total self-sufficiency, from their parents and caregivers. They are out the door—or just about.

The essential economic concepts that students need to understand flow from the personal and civic issues they will face in adulthood. But economic literacy cannot be learned on the fly. This is not something students will “pick up.” The low level of economic literacy among the adult population makes that point. Even the most successful students are unlikely to learn this literacy simply by “doing adulthood” or by “doing public policy” because they begin by not knowing what they do not know. And this is true in spite of having taken a class entitled economics (macro economics) as seniors, or having studied personal finance (micro economics) as part of at least one course of study.

High school economics, a graduation requirement in 22 states, tends to be dominated by a singular focus on personal finance (Council for Economic Education, 2011). Unfortunately, personal finance is often taught as a set of precepts about what students ought to do with their financial lives or as a term-heavy body of knowledge, much of it technical, and some of it arcane, that may not be relevant to students until much later in their lives when they begin making insurance or investment decisions (Gale & Levine, 2010). Schools must revamp personal finance education to make an impact on students’ daily lives. For example, inquiry-based financial case studies may help teachers boost their financial literacy effectiveness in classrooms.

In order to prepare students to responsibly engage the economics of a public policy issue like immigration, or any one of the host of other dilemmas driven by decisions about the federal budget, high school educators must focus hard on those dilemma-driven questions -- questions that go to the heart of democratic citizenship. In most existing curriculum, such topics are presented as illustrations of one or another economic concept or “law.” Fiscal policy as a recurrent, yet ever shifting, set of fundamental dilemmas the nation faces is almost entirely absent from the economics or broader social studies curriculum (Marri et al., 2012b). High school educators should focus squarely on questions that go to the heart of democratic citizenship—but right now, such topics, at best, come in for scarce consideration in high school economics courses (Marri, Ahn, Fletcher, Heng, & Hatch, 2012a; Marri et al., 2011). Economic policy issues remain almost entirely absent from the broader social studies curriculum, which speaks volumes about our failure to engage young people in some of the most pressing moral and civic issues of our times (Marri et al., 2012b). As the economic challenges change and mount, young voters must look at the choices and learn to ask:

Who are we as a nation?

What do we value?

What are our priorities and what are we willing to give up to ensure that we can dedicate resources to those priorities?

When these issues are not engaged, the losses are deep. Not only do students leave high school unaware of the economics of the public policy issues they should confront as citizens, they also miss an opportunity to engage with the most pressing moral and civic issues of our times. School is a setting in which they can clarify their values and beliefs by debating these issues with their peers, and dig into the essential economics underlying them. Schools serve as a crucial locus for fostering active citizens who understand the essential principles of democratic life and active involvement based upon those principles. Schools do so because students will not learn this individually and on their own. Students must be taught to become active and engaged democratic citizens. As John Dewey so clearly articulated, democracy must be learned. As educators strive to achieve this civic education mission, they must include improving the economic literacy of K-12 students as an integral component of fostering active and engaged democratic citizens. For their own sake and the sake of the country, students should leave high school able to measure up.

Students must learn to think critically and independently so that, ultimately, they can form their own evidence-based judgments and develop the skills and the knowledge to explain to others where they stand. Only then will they be able to reach out to those with whom they disagree in a search for common ground or, at the very least, common understanding. As Thomas Jefferson viewed an "enlightened citizenry" as the only proper foundation for democracy, so in today's society we depend on an economically literate citizenry for informed and productive debate of public issues. In a democracy, when there is so much at stake, these skills may be the most important ones we can teach.


Becker, W. (2000). Teaching economics in the 21st century. Journal of Economic Perspectives, 14 (1), 109-19

Consumer Federation of America and The Financial Planning Association (2006). How Americans view personal wealth vs. how financial planners view this wealth. Retrieved from http://www.commondreams.org/news2006/0109-05.htm

Council for Economic Education. (2011). Survey of the states: Economic and personal finance education in our nation’s school. Retrieved from http://www.councilforeconed.org/wp/wp-content/uploads/2011/11/2011-Survey-of-the-States.pdf

Gale, W., & Levine, R. (2010). Financial literacy: What works? How could it me more effective? Retrieved from http://www.brookings.edu/~/media/research/files/papers/2010/10/financial%20literacy%20gale%20levine/10_financial_literacy_gale_levine.pdf

Helman, R., Copeland, C., & VanDerhei, J. (2012, March). 2012 Retirement confidence survey: Job insecurity, debt weigh on retirement confidence, savings. EBRI Issue Brief, 369, 5-32.

Marri, A., Ahn, M., Fletcher, J., Heng, T.,  & Hatch, T. (2012a). Self-efficacy of U.S. high school teachers teaching the federal budget, national debt, and budget deficit: A mixed methods case study. Citizenship, Social and Economics Education, 11(2), 105-120.

Marri, A., Gaudelli, W., Cohen, A., Siegel, B., Wylie, S., Crocco, M., & Grolnick, M. (2012b). Analyzing content about the federal budget, federal debt, and budget deficit in 12 most commonly used high school and college-level economics textbooks. Journal of Social Studies Research, 36(3), 283-297.

Marri, A., Ahn, M., Crocco, M., Grolnick, M., Gaudelli, W., & Walker, E. (2011). Teaching the federal budget, national debt, and budget deficit: Findings from high school teachers. The Social Studies, 102(5), 204-210.

North Central Regional Educational Laboratory. (2003). 21st Century Skills: Literacy in the digital age. Naperville, IL: Author.

President's Advisory Council on Financial Literacy. (2008). 2008 Annual Report to the President. Washington, D.C.: United States Department of the Treasury.

Stern, G.  (1998).  Do we know enough about economics? The Region: Banking and Policy

Issues Magazine, 11 (3).  Retrieved from http://minneapolisfed.org/publications_papers/pub_display.cfm?id=3578

Stigler, G. (1970). The case, if any, for economic literacy. Journal of Economic Education, 1(2), 77-84.

Walstad, W. (1998). Why it’s important to understand economics. The Region: Banking and Policy Issues Magazine, 11(3). Retrieved from http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=3582

Cite This Article as: Teachers College Record, Date Published: April 11, 2014
https://www.tcrecord.org ID Number: 17499, Date Accessed: 5/26/2022 11:23:13 AM

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