The Organization for Economic Literacy was founded with the mission of promoting economic literacy among adults. We aim to make fundamental economic concepts accessible to all and to help people understand the "economic way of thinking".
We aim to offer free public seminars on economic issues, provide free online resources and conduct research on adult economic literacy.
What is economic literacy?
Rest assured, becoming economically literate does not mean turning into an economist. It is not the ability to construct graphs or to solve
complicated mathematical problems.
Economic literacy has two facets. First, it is about cultivating a working knowledge of the economic way of thinking – understanding tradeoffs, recognizing the importance of incentives, and thinking through the full effects of public policy (including the long run effects and potential unintended consequences). Second, it encompasses a familiarity with fundamental economic concepts such as market forces or how the monetary system works. Personal financial literacy can be thought of as a subset of economic literacy.
In his book Economics in One Lesson, Henry Hazlitt sums up Frederic Bastiat's famous essay on unintended consequences and boils down economics to one sentence:
"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it
consists in tracing the consequences of that policy not merely for one group but for all groups."
OEL asserts that economic literacy encompasses not only the understanding of basic economic terminology and facts but also the critical thinking skills that underpin the economic way of thinking. True economic literacy requires the ability to apply knowledge and recognize potential unintended consequences of an action or policy.
Why is economic literacy important?
In 1970, future Nobel Laureate George Stigler made "The Case, if Any,
for Economic Literacy". He argues that there is a need for do-it-yourself economic analysis. Individuals make economic decisions
in their daily lives and also are called upon to vote on public issues, many involving the economy. Stigler argues that individuals'
needs for economic knowledge cannot fully be met by experts and posits "it would appear that every American must be his own economist".
Many issues that voters face have an economic element. In order to enter into the discussion and to make an informed decision, people need the vocabulary and an understanding of the economic concepts underlying the issues. Sales taxes, zoning regulations, and bond issues are but a few of the economic matters that regularly come up for discussion in every town across America. Even the local school boards and home owners associations face an economic element in the issues they consider.
By its very nature, economic literacy encompasses analytical thinking skills. As people move through the stages of life, the tradeoffs they face become more and more complex. The ability to think critically about such decisions facilitates better outcomes.
OEL recognizes that you need to be your own economist. And because of this, seeks to improve economic literacy among adults.
Given that there are numerous well-established organizations promoting economic
literacy at the K-12 and college level, is there really a need to promote economic literacy among adults?
While such organizations have made great strides in promoting economic education, many American adults have never had any exposure
to formal economic education. Even though the majority of US adults have at least a high school degree, not all states require
economics as part of the K-12 curriculum and some curriculum combines or confuses personal finance concepts with economics.
Also, many adults graduated high school before any state level economics requirements were implemented. Furthermore, economics is not
required for many college degree programs.
Even in a scenario where every adult has taken an economics course in K-12 or college, it is unlikely that they would have achieved economic literacy. Recent evidence highlights the need for efforts to foster adult economic literacy. In 2005, the Council for Economic Education conducted a survey of teens’ and adults’ economic literacy. The survey revealed that 62% of adults believe that it is “very important” for people in the US to have a good understanding of economics and 35% said it was “somewhat important”. Despite this belief, 28% of adults failed the test and 14% scored a D grade.
OEL recognizes that there is still cause for promoting economic literacy among adults.