Economic Literacy Is Essential (Commentary)

Economics is often called “the science of decision-making,” and the Arkansas Board of Education recently made an exceptional decision to require all high school students to take an economics course before graduating.

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Students starting classes in the 2010-11 school year will have to take a semester course on economic and personal-finance principles. Arkansas thus becomes the 21st state that makes economics a graduation requirement.

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The new requirement was spearheaded by a statewide collaboration that included educators from across the state, the Arkansas Department of Education, the Arkansas Association of Educational Administrators, the Little Rock Branch of the Federal Reserve Bank of St. Louis and Economics Arkansas.

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The statewide stakeholders all acted in the core belief that economic literacy is essential to allow students to navigate successfully in a global economy and to improve their future standard of living.

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Effective economic education helps students develop skills to meet their financial and personal objectives, including savings, financial stability, home ownership, higher education and retirement. Arkansas also will reap the potential byproducts of a more economically literate population, which should include increased economic development opportunities and reduced poverty.

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Economics Arkansas, formerly the Arkansas Council on Economic Education, is a private, nonprofit educational organization serving as one of the key guides to move the proposal to the forefront of the state Board of Education agenda. Both Economics Arkansas and the Little Rock Branch of the St. Louis Fed provide resources and training to K-12 teachers in both public and independent schools in Arkansas. Both organizations will keep working with schools and school districts across the state so that teachers can effectively deliver the course to students.

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The decision to make the economic education of our youth a priority could not be more timely or important. The current economic crisis showed how important it is for citizens in Arkansas and nationwide to improve their economic and financial literacy. Requiring students to take this course is an important step in meeting the goal of economic and financial literacy.

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In recent years, the financial literacy of high school students and college students in the United States has declined, while the amount of student debt has increased dramatically. In 2008, the average score in the Jump$tart Coalition’s personal financial literacy survey of high school seniors was 48 percent – down from the average score of 52 percent in 2006.

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This indicates that parents, teachers and students have a lot more work to do before we can consider our youth economically and financially literate.

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Personal debt also is increasing nationwide among students in high school and college. A recent study by Sallie Mae, a provider of student loans and administrator of college savings plans, indicates that 39 percent of college freshmen enter college with at least one credit card; by the time they are seniors, the number jumps to 88 percent. Credit card debt among students also is increasing dramatically. Sallie Mae reported that the average undergraduate in 2008 had $3,173 in credit card debt, the highest figure ever recorded.

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To improve the financial future of our students and prevent them from becoming part of this burgeoning problem, it is imperative that they get economic and financial education before they begin piling up debt.

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Thanks to the newly required high school economics course, Arkansas students will be better equipped to make sound economic and financial decisions as they move into adulthood.

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For more information on economic and financial education, visit www.economicsarkansas.org and www.stlouisfed.org.

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(Robert Hopkins is senior branch executive for the Little Rock Branch of the Federal Reserve Bank of St. Louis.)

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