A case study of determining the economic literacy of introductory economic students in South Africa

Abstract

Economic events and economic issues are major concerns worldwide. Leading economies are facing debt crises, recessions and downturns in economic growth. Consumers are confronted daily with increasing food prices, a fluctuating oil price, unemployment and low wages, but despite the attention that has been given to economics in the recent years, economists have found that the public is unfamiliar with economics and basic economic concepts. But how do economists know what the public’s understanding of economics is? Literature suggests that one could test someone’s knowledge about economics, or more specifically, test the level of economic literacy. One way to test for economic literacy is by means of the Test of Understanding College Economics (TUCE). The TUCE is a test that was developed by a number of economists to test the economic literacy level of introductory-level economic students in the United States. The TUCE can be used as a pre-test to test students' understanding of economics after High School or as a post-test to test students' understanding of economics after one year’s worth of economic instruction. After testing a sample of South African students' economic literacy levels with the TUCE, it was determined that the TUCE may not be an appropriate measure for testing economic literacy in South Africa and that an economic literacy test should be developed for the South African context. After taking into account the TUCE and the Voluntary National Content Standards in Economics, the Test of Understanding Economics in South Africa (TUESA) was developed. In July 2013, the TUESA was tested as a pilot study at the North West University Potchefstroom Campus. The results of the pilot study were interpreted and the reliability of the questions was determined, after which a final version of the TUESA was compiled. The final version of the TUESA was used as a pre-test, testing the economic literacy of introductory level economics students in South Africa before any form of instruction took place, and a post-test was conducted to determine the economic literacy of introductory economic students after a year’s worth of economic instruction. The pre-test was done in February 2014 and the post-test was done in October 2014. The overall results of the pre-test indicated an economic literacy score of 50.8 per cent, with a micro-economic literacy score of 48.8 per cent and a macroeconomic literacy score of 54.4 per cent. Results further indicated that there are significant differences between the economic literacy scores by gender, race, majors and students who had been enrolled for Gr12 economics in high school. Results from cross tabulations of data and regression models indicated that students who were enrolled for Gr12 economics in high school have a better chance in passing the TUESA than students who were not enrolled for economics in high school. The overall post-test results indicated an economic literacy score of 58.26 per cent, with a micro-economic literacy score of 54.4 per cent and a macroeconomic literacy score of 59.3 per cent. Furthermore, it was established that there is a significant difference in the students' pre-test TUESA scores and post-test TUESA scores. The Eta Squared value was calculated and it can be concluded that there was a large effect with a substantial difference in the TUESA test scores before and after a year’s worth of introductory economics.