The Economics Of Education

An education in economics is more important than ever. So why are there so few classes?

February, 2005

Last year, Nanakuli High School social studies teacher Dennis Tynan gave an unusual assignment to his class: pick an issue-any issue-on which the state government was spending too little or too much money and then write your legislator, explaining your position. The students were reluctant at first, unconvinced that they were allowed to do such a thing, but they soon were diving into their assignments with gusto. A lesson in government? History? Nope. Try economics.

“Some kids got really fired up. The overwhelming majority of the class ended up writing about the need for more funding and infrastructure improvements in the public schools,” says Tynan, whose classroom needs a paint job and is missing several ceiling tiles. “They learned that their opinions are important and this is how they can make their lives radically different.”

A graduate of Boston College, who majored in history, Tynan is in his second year at Nanakuli. Previously, he taught government and economics in Texas, one of the 14 states that requires the subject for graduation. A self-described history buff, the energetic Tynan says that it is still too early to tell if learning about supply and demand or opportunity costs has changed his students lives. But if piqued curiosity and excitement (for both students and teacher) is any measurement, the course is earning straight A’s.

“Students tell me that they never knew what the stock market was before or that they could even buy stocks. Some have said that this class was the most useful they’ve taken,” says Tynan. “Sometimes when I’m teaching history, I wonder, ‘Now, how is Teddy Roosevelt relevant to these kids?’ But things like banks, there’s an immediate connection. How does the system work, and how can I be a part of it? Economics gives these kids power over their own lives.”

Tynan was hired by Nanakuli principal Levi Chang, who had wanted to offer an economics class at the school since he first arrived six years ago. His teaching staff didn’t have the experience or the time to be trained in teaching economics. But Chang, who was sold on the value of an economics education by a friend and colleague at Farrington High School, made a pledge that one way or another he would have a course offering at Nanakuli within four years. Then Tynan’s resume crossed his desk.

Deficit, What Deficit?
Chang and Tynan are bucking a worrisome trend in Hawaii’s public high schools. According to the Hawaii Council on Economic Education (HCEE), only 22.5 percent of Hawaii public high school seniors were enrolled in economics courses in the 2002-2003 school year (compared to 66 percent of the seniors in Hawaii’s private schools), down from 29.7 percent in 2001-2002. It’s a precipitous fall from the 1998-1999 school year, when 47 percent took a course in economics, a rate that was nearly even with the national average at the time.

“With ATM machines everywhere, credit cards so easy to get and credit-card debt so high, the need for an education in economics is now more important than ever,” says Kristine Castagnaro, executive director of the HCEE, a nonprofit educational organization committed to expanding the economic literacy of Hawaii students. “Every single day, kids have to make simple economic decisions.”

The kids haven’t been doing so well lately.

According to the educational lender Nellie Mae, incoming college freshmen will amass $1,500 in credit-card debt before the end of their first term. They will graduate with more than $20,000 in debt, more than 15 percent of which will be with credit cards. It’s not only college students who are on a spending spree. According to the consumer advocacy group Demos, from 1992 to 2001, the youngest adults (18 to 24 years old) saw the sharpest rise in credit-card debt-104 percent-to an average of $2,985. The second-highest increase-55 percent-was among young adults (25 to 34 years old), who also had the second highest bankruptcy rate, just after those ages 35 to 44.

The kids aren’t doing well, maybe because they don’t know any better. Early last year, HCEE tested 521 seniors in 19 Hawaii public high schools from all seven school districts (see sidebar on page 35). On average, the students answered 53.5 percent of the financial literacy test’s 20 questions correctly, down from 59.8 percent in 2003. One result that Castagnaro found particularly troubling was that only 28.7 percent correctly answered the question concerning the budget deficit. The most popular answer (36.7 percent surveyed) was that they didn’t know the answer, while 21.5 percent confused the national debt with the budget deficit.

“How can these kids not know what the budget deficit is?” asks Castagnaro. “It’s on the news every night.”

The state Department of Education requires content standards in economics to be implemented, but does not require a course in economics to be offered at any grade level, nor does it require student enrollment in such courses. As a result, the existence and success of a particular school’s economics program usually rests on the shoulders of an individual administrator or teacher, “champions” as Castagnaro calls them. She theorizes that one of the reasons enrollment in economics courses has fallen off the table in recent years is that many of these champions have retired. With compliance to the federal No Child Left Behind Act of 2001 shifting the emphasis of many schools to the traditional three R’s, it has been increasingly difficult for many administrators to fill the vacancies.

In response to these drastically falling rates, HCEE adopted a resolution last November that every high school student in Hawaii should graduate with some exposure to economics. The resolution, which at first glance seems rather elementary, was actually a revolutionary statement for the organization, which was founded in 1965.

“The DOE has economic problems of its own that are stressing its resources,” says Gail Tamaribuchi, HCEE member and director of the Center for Economic Education (CEE), an economic-education training center for primary and secondary teachers. “They have a lot of priorities. If we start making demands, we will turn off the DOE immediately, and teachers bristle when it comes to having another mandate.”

Supply and Demand
In economic terms, HCEE has both supply and demand problems. Primary and secondary school economics teachers are an increasingly scarce resource. According to a 2003 UH Manoa report, between 1991 and 1995, the University of Hawaii’s economics department enrolled between 160 and 185 majors annually. Between 1995 and 2001, the number decreased each year, reaching a low of just 74 in 2001. The trend has been reversing over the past two years (142 majors in 2003 and 175 in 2004). However, more graduates in economics do not translate into more economics teachers.

“When Texas mandated that economics had to be taught in it schools, there were only 15 people qualified to teach the subject in the entire state,” says Castagnaro. “Economics majors don’t want to become high school teachers.”

In addition, the number of teachers taking in-service training in economics has plummeted. Between 1988 and 1991, the CEE served between 350 and 425 teachers annually. That number reached a high of 1,147 in 1993, before falling to 200 in 2001 and 2002.

Creating a demand for economics courses from parents and students is another problem. Most parents took their first economics course (if they took one at all) in college, and probably expect their children to do the same, if they get that far. Chang admits that, when he introduced his first class two years ago, his parents were as surprised as his kids.

But, according to Dick Rankin, HCEE member and economics teacher at Iolani Schools, the world today is a lot different than the one in which many parents grew up. And a lot of older folks have a pretty low financial I.Q. themselves. In 2003, an HCEE survey found that a sampling of Hawaii’s workforce, age 16 and over, could only answer 65 percent of the 20-question financial literacy test correctly. Twenty-seven percent could not answer even half of the questions correctly.

“To me it ought to be reading, writing, arithmetic and economics. When was the last time you used an algebra equation to solve a problem? When was the last time you made an economic decision? I made about a dozen before lunch,” says Rankin, who was named the National NASDAQ economics teacher of the year in 2001. “Instead, we are just throwing them to the wolves. And you can’t rely on the families, because as our tests have shown, they aren’t that knowledgeable either. We need to show these parents how bad this problem is. We need to show them that, if there had been education, all these bankruptcies wouldn’t have happened.”

However, Rankin believes that, while learning the intricacies of personal finance is certainly important, the true value of an economics education is learning new ways of thinking, fostering an ability to make informed choices. Better decision makers make better students and citizens, whether they are buying a CD or a car, or voting for president.

Rankin’s arguments are embraced by just about everyone who hears them, parents and administrators alike. But it has been a tough sell nonetheless. How do you implement an economics program system-wide when there are so many demands already? Castagnaro, Tamaribuchi and Rankin all agree that Hawaii’s economics education revolution will likely be a slow, steady, grassroots campaign, converting (and supporting) one school at a time. Not unlike what’s happened at Nanakuli.

Changing the World One Student at a Time
According to Chang, he spent between $25,000 and $40,000 on textbooks and other equipment for his new economics class, which is taught in conjunction with modern Hawaiian history and fills one of Nanakuli’s four social studies requirements.

The principal is in the process of incorporating the subject into the school’s Career Technical Education requirements, making economics a two-year program by 2006. Like Tynan, Chang says that it’s still too early to tell if the classes have had an effect beyond campus. But he does know two things: not one student has asked to drop the class (a significant event at the school) and Tynan’s classroom is filled to capacity.

“Our students need to understand what the Dow Jones is all about, why the New York Stock Exchange is so important. They need to understand what is impacting that dollar in their pocket,” says Chang. “Many of my staff thought it would be too difficult for the kids, that it wouldn’t work. But here we are in our second year. It’s a tough course, but they stick it out, because I don’t know a teenager who doesn’t get excited about money.”

Pop Quiz

Just how financially literate are you? Here are a few sample questions from the survey that the Hawaii Council on Economic Education administered to Hawaii public high school seniors in 2004. If you want to take the whole test, you can find it on the National Council on Economic Education’s Web site at

Q. A large increase in the number of fast-food restaurants in a community is most likely to result in:
1. Lower prices and higher quality
2. Lower prices and lower quality
3. Higher prices and higher quality

Q. A person who starts a business to produce a new product in the marketplace is known as:
1. A manager
2. A bureaucrat
3. An entrepreneur

Q. If the gross domestic product of the United States has increased, but the production of goods has remained the same, then the production of services has:
1. Increased
2. Decreased
3. Remained the same

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