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 offer free one-hour seminars on economic issues and provide free online resources.
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What is economic literacy?
In a Wall Street Journal piece, economist Russell Roberts from George Mason University gives a nice explanation. First, "[i]t's not financial literacy." The K-12 curriculum and the media often treat financial and economic literacy as the same thing. Financial literacy concerns the skills for managing personal financial affairs while economic literacy concerns understanding the consequences of making choices in a world with unlimited desires and scarce resources.
Roberts explains that economic literacy has two parts - factual and conceptual. The factual component of literacy is straightforward to grasp, but what is conceptual literacy? It "means mastering the economic way of thinking - understanding tradeoffs, market forces, and the full effects of public policy."
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 agrees 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".
OEL recognizes that you are 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. While 54% of US adults have completed at least some college, they may or may not have taken an economics course. 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. The learning process should be ongoing.
Given the recent popularity of economics books and blogs written for the laymen, is a formal effort really needed to promote economic literacy?
The recent books and blogs are wonderful tools for promoting economic literacy. However, it does seem that there is still room for a formal effort. The National Council on Economic Education reported that 28% of adults failed a twenty question quiz on the essential principles of economics.
OEL recognizes that there is still cause for promoting economic literacy among adults.