Failing our Children: Wisconsin’s Deficit in Teaching Personal Finance and Economics

Vol. 24, No. 2

Executive Summary

Given the importance of economic and financial education, one might expect to find these subjects emphasized in Wisconsin’s K-12 schools. Other states are ahead of Wisconsin. Twenty-one states now require high school students to take an economics course; thirteen states require students to take a personal finance course. In Wisconsin, neither is required, so few Wisconsin high school students take a course in economics or personal finance, and few teachers are qualified to teach one.

This widespread disregard has real consequences. The financial crisis from which our nation is currently recovering illustrates some of these, having arisen in part from ill-considered decisions by financially illiterate consumers of credit.  For American workers, moreover, the trend away from defined-benefit pensions toward defined-contribution pensions places increasing investment responsibilities in the hands of individuals.   

Evidence suggests that improvement will be a challenge. Surveys and assessments of economic and financial education generally yield dismal results.  Americans are neither confident in their skills in these areas nor do they perform well on tests of knowledge.  Their lack of economic and financial savvy plays out variously — for example, in the lives of large numbers of Americans who find themselves “unbanked” and reliant on dubious sources of financial services such as payday-loan stores and check-cashing outlets. College students, meanwhile, rack up record levels of credit-card and student-loan debt.

In policy and practice, the State of Wisconsin provides minimal leadership in addressing these problems. State law says next to nothing about economic and financial education.  Regulations from by the Department of Public Instruction (DPI) ignore economics and personal finance in general. The DPI does not even enforce its own rules on academic preparation for Wisconsin teachers of high school social studies; they may qualify for licensure without having taken a single course in economics. At the same time, legislators and education officials have established politically driven educational priorities, including an emphasis on the role of organized labor and the collective bargaining process.

The state’s ambivalence helps to explain why very few Wisconsin school districts require students to take a course in economics or personal finance. The state’s lame-duck testing system relegates economics to the bottom of its list of priorities. 

Organizations outside of education have taken up the cause of strengthening economic and personal finance education. Their results suggest certain innovations that, if political obstacles could be overcome, would lead to important improvements. There is, moreover, a national movement under way to support effective instruction in economics and personal finance. Wisconsin could get on board by making some simple, common-sense changes in policy and practice.

Introduction

It’s important both in fostering good citizenship and in personal development for Wisconsin residents to learn economics and personal finance.  In recent years, such education has grown as a national priority. President George W. Bush’s administration formed a national Advisory Council on Financial Literacy.  More recently, the Dodd-Frank financial reform bill included a provision to create a federal Office of Financial Literacy.

As the perceived importance of economic and financial education has grown nationally, it is only natural to ask what has happened locally. This report will assess economic and financial education in Wisconsin, specifically, what Wisconsinites know about economics and personal finance, how important a place economic and financial instruction holds in the state’s educational priorities, how frequently school districts teach these subjects, and how well trained our state’s teachers are to do so.  

The best place to begin is to document the case for why the State of Wisconsin should desire an economically and financially literate public.

Why Is Economic and Financial Education Important?

Economic and financial literacy serves the public interest in several ways. Citizens need to understand basic economics in order to participate fully in our nation’s market economic system and its democratic governance.  Economic issues related to topics like gross domestic product, unemployment, inflation, productivity, and monetary or fiscal policy often dominate electoral campaigns at the federal and state level. In the November 2010 elections, the economy was the number one issue, and politicians traded barbs, often highly misleading, over the unemployment rate, economic stimulus packages, and international trade.  Apart from politics, workers in many careers benefit when they can address work-related issues with some understanding of supply and demand, costs, profits, and production.  And of course people in all walks of life benefit from a practical understanding of personal finance. On the flip side, the costs of economic and financial illiteracy can be great.

The Recent Financial Crisis

The financial crisis from which we are recovering provides a painful illustration of the real-world ramifications of economic and financial illiteracy. While the causes of the crisis are complicated and will be debated by economists for years, the blame list of “greedy” investment bankers, foolish investors, imprudent lenders, incompetent rating agencies, and predatory mortgage brokers must also include financially illiterate consumers. Consumers’ lack of knowledge about mortgages, interest rates, risk, debt and consumer credit played an important part in the crisis.

“Take the greed and the financial misrepresentation out of it, and the root of this crisis is massive levels of financial illiteracy,” said John Bryant, the vice-chairman of the now defunct Advisory Council on Financial Literacy formed by President George W. Bush in 2008, to a reporter.¹ He was likely referring to large numbers of “subprime” borrowers who took on mortgages they couldn’t possibly afford, or others who chose adjustable-rate loans that would be affordable only until their rates reset upward.  He might also have been referring to levels of household debt. Between 1950 and 1980, household debt as a share of disposable (after-tax) income ranged from 40 percent to 60 percent. Since the early 1980s, however, the household debt-to-income ratio has been climbing at an alarming rate.  The ratio reached 135 percent in 2007, more than twice the level of the mid-1980s.  All of these factors, and many others, suggest that a financially illiterate public played a part in the financial crisis.

Retirement Responsibility, Financial Security, and Confidence

Economic and financial literacy is critical to individuals’ efforts to attain short- and long-term financial security. According to the Bureau of Labor Statistics, fewer than twenty percent of private- sector employees now have access to defined-benefit pension plans, and this percentage has been declining for many years.²  As fewer and fewer employers commit to providing specific retirement benefits, employees increasingly bear responsibility to provide for their own retirement by managing their defined-contribution retirement plans and other investments. Coupled with the increased number of financial services now available to consumers via the Internet and with Social Security’s uncertain future, the trend in retirement planning creates an unprecedented need for individuals to be well informed about the options open to them and about the corresponding risks.

Unfortunately, many Americans are not well prepared to handle their new responsibilities. According to a 2009 survey conducted by the National Foundation for Credit Counseling,³ 41 percent of U.S. adults give themselves a grade of C, D, or F on their knowledge of personal finance. In addition, a recent Harris poll⁴ found that, on average, American adults earned a grade of 57 percent for their knowledge of basic economic concepts.  

Behavioral Indicators of Economic and Financial Illiteracy

It is possible, of course, that in their day-to-day conduct Americans show more knowledge about economics and personal finance than the various national assessments suggest. Perhaps many test-takers simply don’t do well on paper and pencil assessments in these areas. But behavioral indicators tell an equally gloomy story.  According to a 2009 FDIC study,⁵  55 percent of African- American households are either “unbanked” or “under-banked” — that is, they have no checking or savings accounts and they make regular use of non-mainstream financial institutions such as payday-loan stores.  Other examples pertain to savings and credit. A 2009 Harris survey reported that only 11 percent of workers under the age of 35 indicate they are participating in their company’s 401(k) plans.  A study conducted by the Atlanta Federal Reserve Bank found that 30 percent of people in the lowest quartile of financial literacy thought they had fixed-rate mortgages when they actually had adjustable rate mortgages.⁶  This study of subprime borrowers in the Northeast also found that 20 percent of people who scored in the bottom quartile on a test of basic financial calculation skills experienced home foreclosures.  The average was five percent for those in the top quartile. Many college students also handle credit poorly. 

According to a report by Sallie Mae,⁷ undergraduates today are carrying record-high credit card balances.  The average balance grew to $3,173 in 2009, with half of all students using four or more credit cards.  According to the same survey, last year’s cohort of college seniors graduated with an average of $4,100 in credit card debt.  This debt, of course, is placed on top of the debts many students owe for student loans.

A Further Look at Students’ Knowledge of Economics and Personal Finance
The 2008 Jumpstart Quiz of Financial Literacy

In 2008, the Jumpstart Coalition for personal financial literacy administered its 31-question quiz on personal financial literacy to 6,856 high school seniors in the United States.  The students scored, on average, 47.5 percent.  This same quiz was also administered to 1,030 full-time American college students.  The college students scored

62.2 percent, on average—a failing score, according to most grading scales.
Perhaps more interesting than average scores are the results for students’ understanding of specific concepts covered in this assessment. Take as examples the following results from the high school quiz:

Table 1 

Results of Jumpstart Financial Literacy Quiz of High School Seniors

Question	Correct Answer (% correct)	Other Answers (% chosen)
Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of high inflation that last several years?	Older people living on fixed retirement income. (40%)	Older working couples saving for retirement (10.6%,)Young couples with no children who both work  (7.7%)Young working couples with children (41.7%)
Retirement income paid by a company is called:	Pension (36.2%)	401(K) (37.4%)Rents and profits (3.6%)Social Security (22.8%)
Sara and Joshua just had a baby.  They received money as baby gifts and want to put it away for the baby’s education.  Which of the following tends to have the highest growth over periods of time as long as 18 years?	Stocks (16.8%)	A checking account (4.7%,)A U.S. government savings bond (37.3%)A savings account (41.3%)
Many young people receive health insurance benefits through their parents.  Which of the following statements is true about health insurance coverage?	If your parents become unemployed, your insurance coverage may stop regardless of your age. (40.4%)	You are covered by your parents’ insurance until you marry, regardless of your age. (18.4%)Young people don’t need health insurance because they are so healthy. (8.2%)You continue to be covered by your parents’ insurance as long as you live at home, regardless of your age. (33%)

On each of the very basic questions highlighted in Table 1, fewer than half of the students in this large sample were able to identify the correct answer.  Many of these students clearly didn’t understand inflation, pensions, stocks, bonds, other investments, health insurance, compound interest, or taxes.

Closer to Home: Wisconsin Students’ Knowledge of Basic Economics and Personal Finance

To date, Wisconsin’s educators have done very little testing of students in the areas of economics and personal finance. In the spring of 2010, however, the Lakeland College Center for Economic Education, with cooperation from state teachers, tested 480 randomly selected Wisconsin high school students.  The test was the nationally normed Test of Economic Literacy (TEL) developed by the Council for Economic Education.⁸

Students from diverse locations around the state participated in the testing.

The sample of students was evenly split by gender (49.5 percent of the students were female).  The largest bloc of test-takers was sophomores (40 percent), followed by seniors (26 percent), and then juniors (16 percent). One hundred seventeen of the students (24 percent) reported having taken a prior course in economics and personal finance. Interestingly, 73 percent of the students believed that all Wisconsin high school students should take an economics or personal finance course as a requirement for graduation. The 480 students earned, on average, a correct score of 14.5 out of the 30 questions (48 percent), on the exam. 

Below is a sample of the students’ responses on this exam (by percent, in parentheses), along with correct answers (in bold).

• Gross domestic product (GDP) is a measure of:

A. the price level of goods and services sold. (17%)
B. total spending by federal, state, and local governments. (30%)
C. the quantity of goods and services produced by private businesses. (32%)
D. the market value of the nation’s output of final goods and services. (21%)

• Inflation is an increase in:

A. interest rates over time. (38%)
B. the standard of living over time. (22%)
C. the general level of prices over time. (19%)
D. real gross domestic product over time. (21%)

• Business firms wish to sell their products at high prices. Households wish to buy products at low prices. In a market economy, this conflict of interest is resolved by:

A. lawsuits. (5%)
B. government. (61%)
C. competition. (11%)
D. collective bargaining. (13%)

• A basic role of entrepreneurs in the economy is to:

A. tell government what new products to produce and sell. (56%)
B. take the risks associated with starting new businesses. (14%)
C. buy and sell the common stocks of corporations. (16%)
D. limit the liability of investors in new businesses. (14%)

Once again, the results are startling.  In each case, the correct answer was among the least likely to be chosen.  It is clear that most Wisconsin high school students have no idea what the common economic terms gross domestic product or inflation mean. Nor do they understand the theory of supply and demand — actually believing the government settles issues related to product prices in a market economy — or  have any idea what an entrepreneur does.

Students taking the TEL also were asked to rate their comfort with personal finance topics on a one-to-five scale.  One represented “not very comfortable” while five represented “very comfortable.”  The results of this survey are shown in Table 2.  The students were most comfortable with the topics of saving (3.7) and career planning (3.5); they were least comfortable with reading financial pages and with bonds and bond markets (2.1). They also reported low comfort with basic concepts such as stocks and stock markets and diversification (2.2). 

Table 2 

Wisconsin Students’ Comfort with Personal Finance Topics

Concepts	Average Response
Saving	3.7
Reading financial pages	2.1
Short-term investing	2.7
Long-term investing	2.6
Stocks and stock markets	2.2
Bonds and bond markets	2.1
Career planning	3.5
Financial planning	3.0
Using credit	2.6
Budgeting	3.0
Diversification	2.2

Students Are Interested in These Subjects

While the evidence suggests that young Americans know little about personal finance and economics, survey data also suggest that young Americans think the concepts in question are important.  According to the 2009 Young Adults and Money Survey sponsored by Charles Schwab,⁹ most young adults between the ages of 23 and 28 consider “making better choices about managing money” the single most important issue for individual Americans to act on today.  Further, 64 percent say that financial fitness is more important than physical fitness, and a majority believes that financial education in grades K-12 is more important than physical education and sex education combined.
Instruction about economics and personal finance is also widely supported by parents. Establishing the relevant programs of instruction would not require a tough sell by school boards to their constituencies.  According to a 2005 Harris Poll commissioned by the Council for Economic Education,¹⁰  96 percent of American adults believe that instruction in basic economics should be included in high school education. 

Many Americans know little or nothing about basic economics and personal finance. Data from several assessments provide solid evidence of this.  Many students and their parents, however, believe students should learn more about economics and personal finance in school.  Taken together, these results raise an obvious question:  why don’t schools in Wisconsin emphasize economics and personal finance in the K-12 curriculum? 

What Does the State of Wisconsin Say About Economic and Financial Education?

While Wisconsin’s public school districts have some flexibility in establishing the curriculum and courses they will offer, the State of Wisconsin conveys a clear message about what is important in K-12 education in the contents of state law, the Department of Public Instruction’s Administrative Code, and Wisconsin’s Model Academic Standards. An examination of these sources reveals that economics and personal finance are low-priority curricular areas in Wisconsin.¹¹

State Law

One primary source of guidance about how Wisconsin school districts should structure their academic programs is provided in Chapter 118 of state law, entitled General School Operations.  This chapter comprises 46 pages of laws, including 80 sub-points, explaining how schools should operate. 

In many cases the law is very prescriptive.  For example, it specifies all the special observance days that school districts must follow, including Casimir Pulaski Day (March 4), Mildred Fish Harnack Day (September 16), and Frances Willard Day (September 28).  In some cases the observance days come with special clarification. About Arbor Day, for example, the law states that “The last Friday in April is Arbor Day, except that if the governor by proclamation sets apart one day to be designated as Arbor and Bird Day under s. 14.16 (1), that day shall be appropriately observed.”  Further, Arbor Day also is covered by its own section of law (118.025) explaining that schools may request one free tree from the state forest nursery for each 4th-grade pupil. 

In several other areas, too, the law is very specific. For example:

• First aid kits. (They are required.)
• School fences. (They shall not diminish the value of adjoining property.)
• Race-based nicknames, logos, mascots, and team names. (A school district resident may file a complaint leading to a hearing on the matter.)
• Lunch periods for teachers. (They shall not be less than 30 minutes and must be scheduled near the time of the regular school lunch period.)
• Corporal punishment. (It is not allowed.)
• Locker searches. (They may be allowed without consent if the school board has written and adopted a proper policy.)
• Bullying. (School boards must have a policy on bullying.)

Finally, Chapter 118 does call for the inclusion of certain particular academic skills and areas of knowledge in the schools’ programs of study.  School boards are required to offer programs of study including the following:

• Basic skills (reading, writing, spelling, and so forth), analytical skills (problem solving, analyzing information), basic knowledge (literature, fine arts, mathematics, natural sciences, and social sciences, including the “knowledge of the rights and responsibilities of the family as a consumer, cooperative marketing, and consumers’ cooperatives,” skills and knowledge that foster lifelong learning, and knowledge in computer science).
• Vocational skills (preparation for careers, preparation for entry-level jobs not requiring post-secondary education, vocational training, and so forth).
• Citizenship (understanding of the basic workings of all levels of government).
• Personal development (skills to cope with social change, physical education, and so forth).

In many cases the law identifies the knowledge and skills that must be taught in a generic manner (reading, writing, mathematics).  Presumably, further direction for how districts should address these areas is provided in other places (for instance, in the state’s academic standards).  In other cases the law is very specific.  For example, it requires students to learn about the vitamin content of dairy products, about consumer cooperatives, and many other specific topics. 

One might expect the law to address economic and financial education under the citizenship requirement. That requirement does cast a wide net.  Citizenship education, according to Chapter 118, must provide for the following:

• An understanding of the basic workings of all levels of government, including the duties and responsibilities of citizenship.
• A commitment to the basic values of our government, including by appropriate instruction and ceremony the proper reverence and respect for the history and meaning of the American flag, the Declaration of Independence, the U.S. constitution, and the constitution and laws of this state.
• The skills to participate in political life.
• An understanding of the function of organizations of society.
• Knowledge of the role and importance of biological and physical resources.
• Knowledge of state, national and world history.
• An appreciation and understanding of different value systems and cultures.
• At all grade levels, an understanding of human relations, particularly with regard to American Indians, Black Americans, and Hispanics.

What messages arise from this list of criteria? The most obvious one is that students must know about government and politics; the first three criteria say so overtly. A second message is that students must know about history and cultures, including minority cultures. These messages are entirely appropriate. It would be very odd for a public school system not to focus effort on teaching young people about the government, history, and cultural profile of their own country.

At the same time, the list of criteria is clearly incomplete. There is a private side to citizenship, and it includes participation in the economy. But Wisconsin’s eight statutory specifications for citizenship education include nothing about participation in the economy.  Absent from the list is any mention of teaching students how a market economy works or how economic institutions function. The list includes nothing about the role of free enterprise, private property, contracts, and other related topics, nothing about the knowledge and skills students will need for managing their personal finances.

The Department of Public Instruction (DPI) Administrative Code

Chapter PI 26 of the Administrative Code contains rules for Wisconsin’s Education for Employment Program.  It states that “all pupils in grades kindergarten through 12 [must] have access to an education for employment program which provides for foundations of good citizenship and which links academic and occupational standards to workplace skills and experiences.”  This goal is to be achieved through the following curricular offerings:

• Career awareness at the elementary grade levels.
• Career exploration at the middle grade levels. Career exploration shall address stereotyping and may include work-based learning experiences and career research identifying personal preferences in relation to future work roles.
• Career planning and preparation at the high school levels, including all of the following:
  • Career research identifying personal preferences in relation to specific occupations and school-supervised work-based learning experiences.
  • Instruction in career decision making and employability skills, including work behaviors.
  • Instruction which provides for the practical application of academic skills and applied technologies.
  • The study of the practical application of economics and American economic institutions, including entrepreneurship education.
  • Pupil access to technical education programs which have a curriculum incorporating accurate national, regional and state labor market information, including labor market supply and demand.

Here we find something approaching specificity about how school districts should address economics and personal finance in the broader context of career education.   

Upon closer inspection, however, it becomes clear that these rules provide very little in the way of substantive curricular guidance.

The first two goals presented — career awareness and exploration — are described broadly and without reference to any academic discipline.   It is unclear what students should actually learn or accomplish in efforts to reach the goals. Teachers could therefore address career awareness and exploration according to PI 26 through a wide range of activities — taking students on field trips, asking students to write accounts of how they like to spend their time, to summarize information from the Internet or from college catalogues, to talk with adult neighbors about their work, and so on — without teaching anything at all about economics or personal finance. The same point holds for the reference, in the career-planning requirement, to academic skills and applied knowledge. Any teacher who teaches reading and writing could meet this requirement simply by assigning tasks of reading and writing that touch somehow on careers. In this way, distinct disciplinary substance could be dissolved in all-purpose school routines. If topical free-association trumped disciplinary understanding, the state’s regulation would still be satisfied.

Second, while one sub-point in the PI 26 career planning requirement calls for study of the practical applications of economics, economic institutions, and entrepreneurship, it does not identify any concepts, principles or institutions that teachers should introduce and use in the application exercises, nor does it indicate anything about where, when, or how extensively such exercises should be carried out. Here, too, PI 26 sanctions almost anything and specifies, therefore, nothing distinctly derived from economics.

Third, PI 26 requires only that school districts provide “access” to the respective areas of study. The access requirement is markedly flexible, so much so that any ordinary school district could claim to have met it regardless of the district’s commitment or lack of commitment to economics and financial education. If the district’s school libraries shelved the local newspaper and some news magazines, it would, by virtue of that fact alone, offer access to information about anything that might be imagined as falling within the Education for Employment rubrics in PI 26.

In short, regarding economics and personal finance, PI 26 is devoid of substance. Its vague formulations require nothing definite and invite application of generic activities that educators are inclined to use anyway for reasons unrelated to economics or personal finance.

The vagueness in question is not merely a stylistic convention of DPI regulatory language, nor does it reflect any general preference within the DPI for leaving matters of detail to be settled at the local level. By contrast, in other curricular areas DPI rules speak pointedly and forcefully. PI 8.01, for example, specifies in considerable detail how school districts are to fulfill their obligations regarding computer science and environmental education. For computer science, “each school district board shall develop, adopt, and implement a written school district curriculum plan which includes a kindergarten through grade 12 sequential curriculum plan, specifying objectives, course sequence, course content, resources, an objective process of determining whether pupils attain the specified objectives, and an allocation of instructional time [for computer science] by week, semester and school term.” For environmental education, similarly, “environmental objectives and activities shall be integrated into the kindergarten through grade 12 sequential curriculum plans, with the greatest emphasis in art, health, science, and social studies curriculum.” No such language is to be found in PI 26.03 regarding the scope, sequence, or substance of instruction school districts must provide about economics or entrepreneurship. And PI 26.03 does not mention personal finance at all.

By contrast, advocates for a different — clearly peripheral — area of study have succeeded in using the political process to implant an area of special interest in a prominent place in the state’s curricular specifications. In 2009, the Legislature was so concerned that students might not be learning enough about organized labor in Wisconsin’s K-12 curriculum that it passed into law Act 99 ¹² to require that the state’s social studies standards include information about “the history of organized labor in America and the collective bargaining process.” These topics, according to our state’s lawmakers, are so important that they warrant curricular inclusion by an alteration of state law — circumventing the more thoughtful process frequently followed in efforts to modify academic standards — thus requiring insertion of the labor-related phrases into the state’s Model Academic Standards. 

Advocates for personal financial education have been obliged to follow a very different procedure in their efforts.  In order to add standards addressing personal finance to Wisconsin’s Model Standards, a task force of more than 50 people deliberated in four meetings between May 2005 and January 2006. Task force members included representatives from public and private schools, academia, the Department of Public Instruction, the Legislature, non-profit organizations, and the business community.  They eventually identified, refined, reviewed, and agreed on content and performance standards for personal financial education.  After each meeting, a group of DPI staff members researched and clarified the material developed by the task force.  The task force also conducted a large-scale online survey of interested stakeholders before it released the final draft of the standards.

Wisconsin’s Model Academic Standards

While state law and the DPI Administrative Code give the study of economic and financial education scant attention, there is another important source of the state’s curricular priorities: Wisconsin’s Model Academic Standards. The DPI maintains that these standards represent the state’s commitment to providing strong programs in economics and financial education.  (These standards will soon be updated and changed as Wisconsin has joined the national Common Core Standards movement; nonetheless, the standards currently in place represent Wisconsin’s most important official voice about how school districts’ academic programs should be constituted.)

On its surface, the DPI’s claim seems plausible. In the standards, economics has a prominent place as one of five sub-categories in the overall social studies listing:

1. Geography: People, Places and Environments
2. History: Time, Continuity, and Change
3. Political Science and Citizenship: Power, Authority, Governance, and Responsibility
4. Economics: Production, Distribution, Exchange, and Consumption
5. Behavioral Sciences: Individuals, Institutions, and Cultures

Furthermore, the DPI developed standards for personal financial education in 2006, identifying the following sub-areas:

• Relating Income and Education
• Money Management
• Credit and Debt Management
• Planning, Saving, and Investing
• Becoming a Critical Consumer
• Community and Financial Responsibility
• Risk Management

These standards in social studies and personal financial literacy have bolstered economics and personal finance education in the state in a number of ways. The standards provide explicit direction about what economics and personal finance content is considered most important for students to learn. As an example, 14 content statements are devoted to economics at grade 12, and 36 statements are devoted to personal finance. This level of specificity and elaboration provides useful guidance to Wisconsin school districts.

Nonetheless, the overall record of follow-up activity shows that the standards initiative thus far has failed to secure a firm place for economics and personal finance in Wisconsin’s schools. This conclusion is based on information about testing, course enrollments, required courses, and teacher training related to economics and personal financial education in the state.

Testing, Enrollments, Required Courses, and Teacher Training  

 State Testing

According to an annual survey conducted by the Council on Economic Education, 49 states (including Wisconsin) and the District of Columbia included economics in their state academic standards as of 2009.¹³    This survey also reveals that 19 states (again including Wisconsin) require that students be tested on content related to these standards.  The Wisconsin Knowledge and Concepts Exam (WKCE) include some economics questions in its social studies component. It amounts to a weak effort to assess learning in economics.

Table 3 shows that, of the five social studies strands tested on the WKCE, economics is the least tested (along with behavioral science) in grade 10, the second-least tested in grade eight, and again tied for least-tested in grade four (along with political science and behavioral science).  The number of questions for economics as compared with other strands does not, in every case, differ dramatically. Still, the difference between questions for history as compared with economics in grade eight is quite marked, as is the comparison of history and political science with economics in grade 10. And the differences, such as they are, tilt in the same direction: history and political science are more heavily tested than economics. This emphasis in testing sends a signal to school districts.

Wisconsin does no testing related to its standards for personal finance.  This is not unusual.  While 44 states include personal finance in their state standards, only 14 states require that a personal finance course must be taken for high school graduation, and only seven states test students according to personal finance standards.

Table 3 

WKCE Test Questions by Social Studies Strands: Grades 4, 8, 10

Social Studies Strands	Questions Grade 4	Questions Grade 8	Questions Grade 10
Geography	9	10	10
History	8	13	12
Political Science	7	6	12
Economics	7	6	8
Behavioral Science	7	5	8
Total Number of Test Items	38	40	50

The Courses Students (Don’t) Take

To determine how the inclusion of economics and personal finance in Wisconsin’s state standards have influenced students’ course-taking, we studied DPI data on enrollments in selected courses. Table 4 shows that enrollments are high for required courses like algebra, English, language arts, and biology.  What is surprising is that enrollments in Spanish — an elective course — exceeded enrollments in economics, by 41 percent. Also, by a margin of more than 14,000, enrollments in concert band exceeded enrollments in economics.

Table 4 

Wisconsin High School Enrollments in Selected Courses in the General Curriculum, 2007–2008

General Curriculum Enrollment in Selected Courses, Grades 9-12	Number of Students Enrolled
Algebra, Year 1	68,815
Algebra, Year 2	47,214
Geometry	62,943
English Language Arts	180,483
Literature	76,580
Biology Year 1	82,166
Chemistry	45,275
U.S. History Year 1	33,319
U.S. History Year 2	33,003
Spanish Year 1	38,308
Concert Band	36,704
Economics	22,289

Finally, the picture for economics looks somewhat brighter when enrollment comparisons include all courses that might include some economics content.  Table 5 shows that, with the inclusion of these courses, economics-related enrollments rise to more than 51,000 students.  While still not at the level for courses typically required for graduation, total enrollments for economics-related courses are not trivial.

Table 5

Wisconsin High School Enrollments in Business and Economics Courses Likely to Include Content Related to Economics and Financial Education, 2007-2008

Title of Course	Number of Students Enrolled
Economics	22,289
Business Organization and Management	8,675
Consumer Economics and Personal Finance	12,395
American Enterprise	5,186
Entrepreneurship	2,919
Total	51,464

School District Requirements

Table 6 summarizes results from a survey of Wisconsin’s school districts.  Completed surveys were received from 316 of Wisconsin’s 426 school districts (a return of about 74 percent).  The results show 26 percent of Wisconsin’s school districts require an economics or personal finance course for graduation.  In contrast, 65 percent of the districts require a course in government.  No one would disagree about the need for Wisconsin’s students to understand the public sector of our society; it is a curious fact, however, that we show far less enthusiasm for teaching about the private sector — where most of our students will eventually find employment and earn their living. To some degree, the explanation is that school districts take their cues from state education policy, as encoded in statutes, regulations, standards, and examinations. Since economics and personal finance find weak support in state policy and assessment practice, Wisconsin’s school districts have little incentive to emphasize either area.

Table 6

Economics, Government, and Personal Finance Requirements in Wisconsin Public School Districts

Required Courses for High School Graduation	Number of School Districts	Percentage of School Districts
Economics	83	26%
Government	206	65%
Personal finance	79	25%

Some evidence suggests that the situation is not static. According to the 2009 “Survey of the States” conducted by the Council for Economic Education,¹⁴ 21 states currently require an economics course for graduation, while 13 require a personal finance course. 

Interestingly, both of these numbers are up significantly from the last survey conducted in 2007.  At that time, economics was required in only 17 states while personal finance was mandated only in seven.  The national trend seems to be toward more economic and financial education.

Table 7

Economics and Personal Finance Requirements Nationally

Required Courses for High School Graduation	Number of States
Economics	21
Personal finance	13

Teacher Training Requirements

As discussed earlier, economics is one strand in the social studies curriculum in Wisconsin, as it is in most states.  Social studies teachers are generally certified for broad field social studies teaching — each teacher with a concentration in at least one of the five strands.  PI 34, the section of DPI code that governs teacher licensing in Wisconsin, requires that teachers certified in social studies be competent in each of the social studies strands.  PI 34 states, “The social studies program shall include competencies in each of the subcategories listed in this subdivision with a concentration in at least one of the subcategories.”  The code further states that in order to be licensed in social studies, an individual must complete a program that incorporates the Wisconsin model academic standards for social studies, including all of the strands.

It would seem to follow that teacher training programs for social studies licensure would require strong academic coursework in each of the five strands, including economics. That turns out not to be the case. 

An analysis of the coursework required in training programs for broad field social studies licensure in Wisconsin makes it difficult to imagine, if not impossible to believe, that teachers graduating from many of the programs can meet the requirements of this code.  Table 8 shows that many teacher training programs at Wisconsin’s state colleges and universities require no economics or business courses in their broad field social studies programs. For the 10 state programs that offer training for broad field social studies licensure, the average number of credits required in economics and business is 2.7, or less than one typical course.  For licensure in elementary education, the situation is worse.

Wisconsin does have curricular standards in economics and personal finance for students in grade four, but no teacher preparation program in the state requires a single economics or business course in its elementary education program. 

Table 8

Broad Field Social Studies Major Requirements at UW Universities

UW Institution	Number of Credits in Economics or Business Courses Required in Broad Field Social Studies Majors	Number of Credits in Economics or Business Courses Required in Elementary Education Majors
Eau Claire	6	0
Green Bay	3	0
La Crosse	0	0
Madison	0	0
Milwaukee	3	0
Oshkosh	0	0
Platteville	6	0
River Falls	3	0
Stevens Point	3	0
Whitewater	3	0
Average	2.7	0

PI 34 also makes it clear that in order to teach an upper-level course (defined as a course for grades 11 or 12) in social studies, individuals must have completed a concentration in the specific content area in which the course is offered.  While this rule assures that high school juniors and seniors will not take an economics course from a teacher who never took an economics course in college, it does not protect students in grades nine or 10.  DPI enrollment data show that high school students who take a course in economics usually do so in grade 11 or 12.  Still, more than 1,800 Wisconsin students took an economics course in their freshman or sophomore years in 2007-2008.  It’s entirely possible that their teachers, while properly licensed under PI 34, had never taken a single college-level economics or business course.

The lack of required economics coursework in teacher training programs most likely reflects the weak presence of economics in the Praxis II exam.  This exam, which all prospective teachers must pass to qualify for licensure in Wisconsin, includes a specific social studies test for prospective teachers pursuing the broad field social studies license. In respect to economics, the Praxis II exam resembles the WKCE exam for K-12 students: economics is among the least-tested areas.  The number of questions in each content area is shown in Table 10.  Economics,  geography, and behavioral sciences are the least-tested areas; history, political science, civics, and government dominate the test.  It’s not surprising, then, that courses in those areas also tend to dominate course requirements in the training programs for licensure in broad field social studies at Wisconsin colleges and universities.

Table 9

Content of the Social Studies Praxis II Exam

Content Categories	Approximate Number of Questions	Approximate Percentage of the Examination
United States history	29	22%
World history	29	22%
Government / civics / political science	21	16%
Geography	19	15%
Economics	19	15%
Behavioral sciences	13	10%

It’s interesting to note that while economics is part of the social studies curriculum in Wisconsin, and social studies teachers are certified to teach economics, an argument could be made that business teachers are at least as qualified to teach in the area.  The two UW system schools that offer business education require substantially more course work in economics and business than any of the broad field social studies programs.  At both of these institutions, business education majors are required to take college-level micro- and macroeconomics, along with courses in accounting, marketing, and other business areas.  In addition, as Table 10 shows, the Praxis II exam in the business education area focuses substantially on business and economics.

Table 10

Content of the Business Education Praxis II Exam

Content Categories	Approximate Number of Questions	Approximate Percentage of the Examination
United States economic systems	12	10%
Money management	17	14%
Business and its environment	13	11%
Professional business education	24	20%
Processing information	20	17%
Office procedures and management, communications, employability skills	17	14%
Accounting and marketing	17	14%

Turning again to personal finance: even though Wisconsin has state standards for personal finance, PI 34 specifies nothing about how teachers should be prepared to teach in this area.  The problem is not unique to Wisconsin. A recent national study conducted by two UW-Madison professors¹⁵ surveyed more than 1,200 teachers in eight states, including Wisconsin, regarding preparation to teach personal finance.  Their results include the following troubling facts:

• 63.8 percent of the teachers feel unqualified to address their state’s financial literacy standards.
• Only 29.7 percent of the teachers are teaching financial education in any way.
• Only 37 percent of the teachers had taken a college course in personal finance.
• Less than 20 percent of the teachers reported feeling very competent to teach any of the personal finance topics mentioned on the survey.

The Need for Trained Teachers

There is a dearth of teachers in Wisconsin who are well qualified to teach economics and personal finance. The DPI’s teacher database shows that there are many social studies teachers in Wisconsin’s school — more than 2,200 of them.  However, only 199 teachers are listed under the economics category.  Not unexpectedly, business education has a more sizeable cohort of around 900 teachers; and even geography (282), German (281), and psychology (243) employ more teachers than economics.  Further, while the broad field social studies license is offered at thirty-one of Wisconsin’s teacher preparation programs, only thirteen offer certification in economics.

When teachers are taught these subjects, however, they often develop an interest for them that can lead to strong content knowledge and thus instruction skills.  For example, as part of this study, 90 Wisconsin teachers took the Test of Economic Literacy (TEL) in the spring and fall of 2010.  These teachers were recruited through a workshop on economic and financial literacy and they were given an incentive —free curriculum materials from the Council on Economic Education.  Also, high-scoring teachers were promised gift cards to an online bookseller.  Given all these facts — in particular, the teachers’ voluntary enrollment in a workshop on economic and financial literacy — this group does not constitute a random sample of Wisconsin public school teachers. Rather, it’s a self-selected group marked by prior interest in economics.

Before they took the TEL, the teachers answered questions about their personal and professional background.  The background information described this group as relatively well qualified in economics and personal finance.  Many of them teach business or economics, most of them have completed college coursework in economics, and many have attended workshops on business or economics.  Not surprisingly, then, these teachers did quite well on the TEL. Their average score was 25 out of 30 correct, or 83 percent.  Overall, the economics teachers averaged a score of 29 of 30 correct, or 97 percent; the business teachers averaged 26 of 30, or 87 percent; the social studies teachers averaged 25 of 30, or 83 percent; and the family and consumer education teachers averaged 24 of 30, or 80 percent. 

Not surprisingly, scores rose as teachers had taken more college-level economics courses or had attended a workshop on economics or personal finance.  Teachers who had taken more than three economics courses scored, on average, 28 of 30, or 93 percent.  Teachers who had never taken a course in economics scored at 23 of 30, or 77 percent.  Teachers who had attended a workshop on these topics scored about 10 percent higher than those who had not. 

It is clear that properly trained teachers can learn economics and personal finance well.  A stable cohort of such knowledgeable teachers is needed in Wisconsin to properly address the void of instruction.

Stepping Up to Fill a Void: Leadership from Wisconsin Organizations

Wisconsin’s state government does little to foster economic and financial education in the K-12 public schools.  Ambivalence and neglect on the part of state officials have left the door open for other groups — including one working within state government — to fill the void created by the state’s lack of leadership. 

 EconomicsWisconsin.  This nonprofit, nonpartisan group is governed by a board of directors made up of business and professional leaders, educators, and representatives from agriculture and labor.¹⁶  The group’s mission involves bringing business, labor, and education together in efforts to provide resources to support the teaching of economics and financial literacy.  Since 1963, EconomicsWisconsin has helped elementary and secondary teachers gain competence in and confidence for teaching about our market system and issues of personal finance.  

EconomicsWisconsin is part of a national network of state organizations affiliated with the Council on Economic Education.¹⁷  This group uses standards-based curriculum and a network of college- and university-based centers to help Wisconsin’s K-12 teachers in economics and personal finance. It conducts noncredit workshops, for-credit programs, online graduate courses, and other programs.  It sponsors programs for K-12 students, including the Wisconsin Stock Market Simulation. However, by concentrating on teacher training, the organization takes advantage of a multiplier effect — that is, each teacher trained can work with thousands of students over the course of a career. 

As can be seen in Table 11, EconomicsWisconsin programs are in high demand. In 2009, EconomicsWisconsin offered training for almost 3,000 teachers in more than 50 programs.  These programs are offered, in part, to fill the dearth of formal instruction in Wisconsin’s schools of education. 

Table 11

Economics and Personal Finance Training Programs Conducted by EconomicsWisconsin

Year	Teachers Trained	Training Programs	Teacher Contact Hours	National Rank by Number of Teachers Trained
2009	2,927	54	18,302	6
2008	4,638	98	26,598	4
2007	2,545	94	22,497	2

Wisconsin Office of Financial Literacy.   The Wisconsin Department of Financial Institutions created the nation’s first-ever Office of Financial Literacy (OFL) in 2000.  The OFL is housed in the Office of the Secretary.  It employs a director, a marketing and communications director, and a project manager, providing a state government-based educational engine to promote financial literacy. 

 The OFL has established a new means of promoting financial literacy, elevating awareness of the need.  Most important, it has involved key decision makers from government, business, nonprofits, and education in its efforts.  It has developed a network of financial education organizations across the state.  It has been involved with virtually every financial literacy activity in Wisconsin since its inception.  Harvard University’s Ash Institute for Democratic Governance and Innovation at the John F. Kennedy School of Government named the OFL as one of its 2009 top 50 innovations in government.

The OFL takes the lead in offering teacher workshops under the banner of the National Institute of Financial and Economic Literacy (NIFEL) and in sponsoring Money Smart Week Wisconsin, the nation’s first-ever statewide financial literacy campaign. Its director was appointed to the President’s Advisory Council on Financial Literacy.   The NIFEL program is designed to train teachers in economics and personal financial literacy through a summer program.  Since its inception in 2002, more than 690 teachers have participated in the program — 90 percent of them from Wisconsin.

Conclusion

In the academic programs of Wisconsin’s public schools, economics and personal finance have a weak presence. Despite the obvious importance of the subject matter, relatively few students take courses in economics or personal finance, relatively few teachers are qualified to teach such courses, and educators generally do not see the situation as problematic.

The explanation has to do with weak leadership at the state level. Widespread neglect of economics and personal finance in the schools reflects a climate of ambivalence among policymakers and bureaucrats regarding the relative value of these areas of study. Wisconsin has weak laws and regulations on the teaching of economics and personal finance. Weak support or outright neglect at the state level has ripple effects in local districts, where educators understandably concentrate their efforts and resources on objectives emphasized in state policy and tests.

The situation looks bleak, but it is not hopeless. The void created by state-level policymakers has left the door open for initiatives from various Wisconsin organizations outside the education professions. These initiatives suggest innovations in policy and practice that would, if political obstacles could be overcome, strengthen the teaching of economics and personal finance in Wisconsin’s K-12 schools. 

Recommendations

1.The state of Wisconsin should require that Wisconsin students take a course in economics and personal finance before graduating from high school.  School districts should be given flexibility in meeting this requirement.  Objectives to be addressed should meet current Wisconsin academic standards in economics and personal finance.  In particular, a course satisfying the new requirement should focus on this content:

• income, education and careers, money management, credit and debt, saving and investing, and risk management and insurance;
• how a nation’s income, employment, and price levels are determined by household, business, and government decisions about production and spending;
• production and exchange, consumption, labor, wages, capital, inflation and deflation, and market economic systems;
• the role of Wisconsin and the United States in the world economy;
• how federal budgetary policy and the Federal Reserve System’s monetary policy influence employment, interest rates, production, and prices;
• basic characteristics of trade: comparative and absolute advantage, the gains from specialization, barriers to trade, exchange rates, and balance of trade;
• the role of supply and demand, competition, prices, incentives, and profits in a market system;
• the role of institutions, including corporations, banks, labor unions, and the Federal Reserve System.

2. Only teachers highly qualified in economics and personal finance should be certified to teach the required course.  Recognizing that hundreds of Wisconsin teachers will need to be trained in economics and personal finance, the Legislature should pass two provisions as part of this mandate:

• The Department of Public Instruction should suspend its normal rigid certification rules and provide a number of flexible paths for teachers to qualify for teaching the required course.  While the conventional certification in economics will be one avenue, teachers should also be allowed to teach the course after passing a Wisconsin Education Proficiency Exam in economics and personal finance or attending a series of professional development workshops designed and implemented by the statewide organization EconomicsWisconsin.
• Money should be granted to an appropriate private nonprofit organizationto design and offer workshops for teachers throughout the state.  These workshops would include a syllabus and online guide for the high school economics course, covering the necessary standards and concepts.   

3. The teaching of high school economics should be decoupled from regulations governing the social studies curriculum.  In many cases, teachers certified in business education are equally well qualified to teach courses in economics.  Which teacher teaches an economics course in a district should be determined by school boards and administrators in that district, based on the qualifications of prospective instructors, not a DPI rule.

4. Social studies teachers should not be allowed to obtain a broad field social studies license without taking at least one specific course in economics.

5. The testing of students for knowledge about economics and personal finance should be dramatically increased in the forthcoming replacement for the Wisconsin Knowledge and Concepts Exam.   Testing for knowledge of economics and personal finance should be placed on an equal footing with testing for other social studies strands, including history.

6. The Legislature should retract the recently enacted requirement that forced the history of organized labor and collective bargaining into the state’s social studies standards.      

Endnotes

1. John Bryant, quoted in The Economist, April 3, 2008.

2. According to the Bureau of Labor Statistics “Employee Benefits Survey,” conducted in March 2010.  For more information, see  http://www.bls.gov/ncs/ebs/benefits/2010/benefits_retirement.htm.

3. The results of the 2009 Consumer Financial Literacy Survey can be found on the website of the National Foundation for Credit Counseling at http://www.nfcc.org/NewsRoom/FinancialLiteracy/files/2009FinancialLiteracySurveyFINAL.pdf.  

4.The results of this survey can be found at  http://www.councilforeconed.org/cel/results.php.

5. The results of this study can be found at  http://www.fdic.gov/householdsurvey/executive_summary.pdf.

6. Kristopher Gerardi, Lorenz Goette, and Stephan Meier,  Financial Literacy and Subprime Mortgage Delinquency: Evidence from a Survey Matched to Administrative Data.  Federal Reserve Bank of Atlanta.  April 2010.  Available from:  http://www.995hope.org/content/pdf/Federal_Reserve_Bank_of_Atlanta.pdf.

7.Sallie Mae, “How Undergraduate Students Use Credit Cards,” April 2009.

8.More information about this test can be found at  http://store.councilforeconed.org/exman2.html.

9.For more information see  http://www.aboutschwab.com/media/pdf/YoungAdults_and_MoneyFactSheet.pdf.

10. The results of this survey can be found at  http://www.councilforeconed.org/cel/results.php.

11. Much of this information is summarized with permission from a previously published report available from: https://e74sq7k37a8.exactdn.com/wp-content/uploads/2022/08/Vol16no4.pdf.

12. For more information, see Chapter 115 of  Wisconsin state statutes at  http://www.legis.state.wi.us/statutes/Stat0115.pdf.

13. This survey is available from  http://www.councilforeconed.org/about/survey2009/CEE_2009_Survey.pdf.

14. The results of this survey are available from  http://www.councilforeconed.org/about/survey2009/.

15. See “Teachers’ Background and Capacity to Teach Personal Finance:  Results of a National Study” by Wendy L. Way and Karen Holden, at www.nefe.org/tntfinalreport.

16. For more information about EconomicsWisconsin visit www.economicswisconsin.org.

17. For more information about the Council for Economic Education visit www.councilforeconed.org/.