The Cost of Economic Literacy: How Well Does a Literacy-Targeted Principles of Economics Course Prepare Students for Intermediate Theory Courses?

Abstract

In a typical economics principles course, students encounter a large number of concepts. In a literacy-targeted course, students study a “short list” of concepts that they can use for the rest of their lives. While a literacy-targeted principles course provides better education for nonmajors, it may place economic majors at a disadvantage in postprinciples courses. In this article, the authors test whether students who completed a literacy-targeted principles course earned intermediate theory grades as high as those of students who completed a traditional principles course. The authors’ findings indicate that students who complete a literacy-targeted principles course perform no worse in intermediate theory courses than students who complete a traditional principles course.

Keywords:

• economic literacy
• economics major
• intermediate macroeconomic theory
• intermediate microeconomic theory
• principles of economics

JEL codes:

• A22
• D00
• E00
• I21

Acknowledgments

The authors thank James Self, Indiana University, two anonymous referees, and conference participants for helpful comments. A longer version of the article with additional description of the literacy-targeted principles course and the data used in this study is available at www.unc.edu/~salemi.

This article is based on a paper that was presented at the National Conference on Teaching Economics held at Stanford University on June 1–3, 2011.

Notes

1. Our coefficient estimate implies that raising class size by 100 students lowers the average grade earned by 0.10 grade points.

2. North Carolina mandates that at least 85 percent of each first-year class comprise North Carolina residents.

3. We were not able to determine what sort of student mastery translates to success in intermediate economic theory courses in part because of great variation in intermediate theory instructors and syllabi.

4. In order to conserve journal space, we do not report these regression results in the article. However, the results are available from the corresponding author on request.

5. In order to conserve journal space, we do not report regression results based on different subsamples in the article. However, those results are available from the corresponding author on request.

6. In order to conserve journal space, we do not report the Heckman regression results in the article. However, those results are available from the corresponding author on request.