Countless individuals, organisations and institutions are involved in economic education around the world. But what for? What are the potential benefits? Those who consider education a basic human right or a good in itself may find these questions unnecessary. We’re not denying that education per se is something beneficial (and we will, if necessary, be glad to come back to this matter ...). However, since economists always ask about marginal utility and marginal cost, it would be unfair to shield one’s own discipline from this question. So I would like to take up and explore the issue in a small blog series.

There are various desired – or feared – consequences of economic education that have been scientifically researched in a more or less systematic manner.[1] Most existing studies deal with the impact of financial education, a specific sub-section of economic education. As a first, rough conclusion, the majority of these studies can be said to have found the hoped-for impact, but research in this matter is still at an early stage and numerous unanswered questions remain (cf. chart below).

An initial question could be whether any one specific measure (e.g. teaching with iconomix) actually changes the learner’s state of knowledge. Naturally, this is a question we want to pursue. So let’s bravely assume that individual knowledge or a broadly defined set of skills are in fact influenced by educational activities. This leads to the equally interesting question of whether the change in knowledge causes any change in the individual’s behaviour. And does this then have consequences at social and macroeconomic levels?

The following possible effects of economic education on the behaviour of individuals have been discussed and partly researched in economic literature:

• More circumspect financial and risk-related conduct (saving, debt, financial planning, investment decisions, etc.)
• More discerning attitude as a consumer
• Impact on everyday decisions
• Impact on political views
• Impact on professional career and income
• Impact on social and cooperative behaviour

The relevant literature and prominent supporters of economic education have also suggested possible (positive) effects at macroeconomic level (although empirical data is relatively limited):

• More innovation and efficiency in the financial and consumer good markets
• Greater financial stability
• Smoother implementation of monetary policy
• Higher savings rate (more capital accumulation)
• Impact on economic policy

The individual questions raised here will be discussed in greater detail in the blog. And the list of questions is by no means exhaustive. Additions and feedback are always welcome!

On behalf of the iconomix team

Michael Manz

[1] Cf. also Watts, Michael (2005), What Works: A Review of Research on Outcomes and Effective Program Delivery in Precollege Economic Education.