It’s Economics, Stupid!

It’s Economics, Stupid!

David Azerrad Summer 2009
SOURCEinFocus Quarterly

Seventeen years ago, a presidential hopeful from Arkansas explained to the American public, “It’s the economy, stupid.” Today, with the country mired in its worst recession since World War II, Bill Clinton’s words still ring true. But the problem no longer lies with those who don’t understand its importance, but rather with the many who don’t understand economics, period.

Survey after survey confirmed what late night comedian Jay Leno’s jaywalking interviews humorously (and sadly) illustrate on a smaller scale: even as the current recession dominates the news headlines, an overwhelming majority of Americans are unable to answer the most basic questions about economics.

A Lack of Understanding

According to the National Council on Economic Education (NCEE), more than half of American adults do not understand what it means to say that the Gross Domestic Product (GDP) has increased. Nearly two-thirds do not know that in times of inflation, money loses value, the NCEE poll revealed. As for the current mess we’re in, less than half of Americans can identify what a subprime mortgage is, according to a recent survey by the nonprofit Center for Economic and Entrepreneurial Literacy.

While no one will go so far as to blame the current debacle on widespread economic illiteracy, part of the nation’s ongoing soul-searching must address the question of whether we are preparing leaders and citizens who can understand and think critically about this crisis, or for that matter, economics in general.

While we’ve heard innumerable stories about the causes of the downturn, its ripples and repercussions on every conceivable segment of American society, and how best to revive the moribund economy, we have for the most part ignored this fundamentally important question.

To answer it, the American Council of Trustees and Alumni surveyed 100 leading universities across the country to identify which ones require their students to take at least one introductory economics class. The results are disheartening. Only two institutions—the University of Alaska in Fairbanks and the United States Military Academy at West Point—have an economics requirement. The rest—including the entire Ivy League, the top liberal arts colleges according to U.S. News & World Report, and the flagship public universities in each of the other 49 states—are not doing anything to ensure that their graduates are economically literate.

Not surprisingly, the results of the Intercollegiate Studies Institute’s survey of college graduates reveal similarly stunning levels of economic ignorance. For example, 40 percent of those polled by ISI did not know that business profits equal revenues minus expenses. Only half could articulate the principles underlying free market capitalism.

A Dismal Science No More

This failure of our universities to make sure that students grasp the fundamentals of a science that is now an integral part of modern life is baffling. It may have been acceptable in the medieval university, which inherited the classical prejudice against things related to the household (oikos in Greek, from which we derive economy) and thereby excluded economics from the seven liberal arts. It may even have been fine during the Victorian age, when the historian Thomas Carlyle could still refer to economics as “the dismal science.”

Today however, we give out Nobel Prizes in economics, trade with the entire world, and feel the effects of economic crises the world over. Those representing us in government get elected largely on the economic promises they make to voters. Aristotle’s homo politicus has long been replaced by John Stuart Mill’s and Adam Smith’s homo economicus. Isn’t it time our universities woke up to the realities of the 21st century and started making sure their graduates are equipped to understand the fundamental principles of economics?

Rotten Core Requirements

Unfortunately, the dearth of economics requirements at our colleges and universities is part of a broader sad story: the collapse of the core curriculum. On campus after campus, critical subjects like math, science, and American history have become optional. In ACTA’s study, only 11 of the 100 colleges and universities surveyed have an American history or government requirement. Barely more than half require mathematics.

Some will claim that requirements are outdated and that students should be free to decide which classes they wish to take. They are, after all, paying for them. But students are not consumers, classes are not commodities, and an education isn’t simply a collection of courses that add up to a degree.

A college education—or any education, for that matter—presupposes that those who know more teach those who know less. Indeed, an undergraduate education is supposed to prepare students to become informed, engaged, and productive citizens by acquainting them with certain fundamental areas of knowledge.

Rather than leave it up to 18-year-old freshmen, still inexperienced in the ways of the world, to determine what they need to know, educators and administrators should exercise judgment and identify critical areas for mandatory study. Students, of course, remain free to choose from an array of courses to fulfill their requirements and pursue their own interests through electives, but the basics should be covered.

In other words, Economics 101 should not be just one more option among “Mafia Movies” (Barnard College), “Digital Game Studies” (Dartmouth College), and “The History of Furniture” (University of Nebraska at Lincoln).

What About High Schools?

As for those who would put their trust in our high schools, a 2007 survey by the NCEE reveals that only 17 states include economics as a graduation requirement. But the requirements are minimal. For example, the New Jersey State Board of Education requires only a half-year of economics and financial literacy. Similarly, Alabama, Arizona, and Florida require just a half-credit in economics in order to graduate.

This makes college-level attention to economics even more essential. Indeed, even if our high schools were doing their job, universities should shoulder the responsibility to strengthen what had already been learned, and to build upon it. A high school classroom is no substitute for a college lecture hall.

Trustee Action

If we can agree about the importance of having an economically literate citizenry, and if we can recognize the crucial role played by colleges and universities in educating the next generation, how can America’s institutions of higher learning begin to address the issue? Instituting an economics requirement is one simple and inexpensive answer.

The first step is for university governing boards to examine their existing curricula and to determine whether they provide a sound basis for an undergraduate education. As they do this, trustees must be wary of so-called distribution requirements. An introductory economics class may well satisfy something like a “Social Sciences” requirement—but so will a plethora of narrow, trendy, and oftentimes frivolous courses. For example, at Cornell University, a student may take introduction to microeconomics or macroeconomics to meet the Social and Behavioral Analysis requirement. However, a student could also take any one of almost 300 other classes, including “Ways of Knowing: Indigenous and Local Ecological Knowledge.”

With this in mind, trustees should initiate a discussion about what they believe graduates should know and whether the school in question is providing students the education they need. Trustees must work with the president, whose leadership is essential in strengthening core requirements, and the faculty, who must develop appropriate classes to meet them. Faculty input is crucial and will go a long way to facilitate the implementation of requirements.

Still, while the academic program is primarily the responsibility of the faculty, and trustees should not be drafting course outlines and selecting reading lists, it is the board’s ultimate responsibility to ensure students graduate with a sound education. The trustees’ responsibility is to make sure that the institution fulfills its educational mission —not to make life convenient for those who work there.

Alumni Involvement

Alumni also have the power to influence their college communities. They, too, should speak out for higher standards in education. More than half of all alumni give to their alma maters. Instead of giving to the annual fund or capital campaign, alumni should direct their giving in ways that support educational excellence in general, and economic literacy in particular.

Alumni can endow visiting scholar programs or lecture series to expose students to important economic issues which they would not otherwise come across on their own —either because the university’s own academic departments do not address such topics, or because the students would not be inclined to register for a class on them.

At Duke for example, alumnus Gary Gerst gave a substantial grant to launch the Gerst Program in Political, Economic, and Humanistic Studies in 1998. Among other things, the multi-layered program sponsors a speakers’ series and an annual conference. Gerst’s grant has provided the university community with valuable programs on a variety of topics, including economics.

Knowledge and Freedom

In 1816, Thomas Jefferson warned us about the dangers of popular ignorance. “If a nation expects to be ignorant and free,” he wrote, “it expects what never was and never will be.” While his words were intended as a plea for freedom of the press, they could easily be a plea for better education standards on economics. And though a sound grasp of economics may not have formed an integral part of informed citizenship two hundred years ago, we cannot do without it today.

Our universities, which we support with tax dollars and voluntary donations, must make sure that the voters and leaders of tomorrow possess the foundational knowledge necessary to make sense of an increasingly complex world and respond to future challenges. Indeed, it is time they recognize the importance of economic literacy and give Jay Leno one less subject to work with.

David Azerrad, a PhD candidate in politics at the University of Dallas, is a program officer at the American Council of Trustees and Alumni, an independent nonprofit dedicated to academic freedom, academic excellence and accountability in higher education.