Economics has been called the dismal science, and it would seem the public education system shares that view.
Just 40 per cent of Australian high schools offer economics as a subject compared to more than 90 per cent back in the early 1990s — and most of those that do are private and selective schools.
Those figures have been compiled by the Reserve Bank, which now wants to boost economics studies in public schools for the greater good.
The RBA’s assistant governor Luci Ellis argued that, not only do students graduating with economic degrees attract higher starting salaries, it also equips them with a “powerful framework to understand how the world works”.
Financial literacy crisis
There are certain things in life we tend to procrastinate about more than others, like drawing up a yearly household budget or filling out our tax returns.
The corporate watchdog, the Australian Securities and Investments Commission (ASIC), believes that is because they are too daunting for many.
ASIC is sounding the alarm about the number of Australians who find dealing with money overwhelming.
The Financial Capability website, which is managed by the ASIC, shows too many Australians feel out of their depth when faced with basic financial concepts and decisions.
35 per cent know the exact value of their super
40 per cent understand the concept of diversification (asset allocation within an investment portfolio)
59 per cent of Australians pay their credit card balance in full every month
ASIC says women are disproportionately represented in these statistics.
Its Australian Financial Attitudes and Behaviour Tracker survey has found 41 per cent of women find “dealing with money stressful and overwhelming”.
“That’s not good enough,” Laura Higgins from ASIC’s Financial Capability team said.
“When you feel overwhelmed, and it feels like too much, you aren’t going to necessarily end up with the best products and services for your family.”
Ms Higgins however wants to draw a distinction between feeling overwhelmed by financial decisions, and making good decisions about money.
“Just because they don’t feel confident doesn’t mean they don’t have a budget, and aren’t aware of key superannuation concepts, but it might mean that they don’t have the confidence to challenge their bank on things, or question advice they’ve been given from a financial adviser,” she explained.
Financial literacy empowers consumers
Levels of financial literacy have emerged several times during the banking royal commission.
It is generally understood higher levels of financial literacy put consumers in a more powerful bargaining position when dealing with banks and other financial institutions.
ASIC argues the best place to begin improving levels of financial literacy is in high schools.
“How does that align with what we know about mathematics and economics and what conversations women feel they can be a part of? It’s absolutely connected,” Ms Higgins said.
“That’s why having women studying economics is really important.”
That’s where another member of the Council of Financial Regulators, the Reserve Bank, comes in.
Declining number of economics students a worry; RBA
The RBA is sending its staff into schools across the country, advocating for more economics classes and encouraging students to get more involved in the financial news cycle, because, it believes, more financial education is the key to solving the problem.
“It helps you understand the wider world,” Reserve Bank assistant governor Luci Ellis told RN Breakfast.
“In the early 1990s over 90 per cent of high schools were offering economics as a subject, now only about 40 per cent of high schools offer economics as a subject.”
“In terms of the number of students studying economics to HSC level, it was around about 40 per cent back in the early 1990s. Now it’s more like 10 per cent, and that’s partly because fewer schools are offering it.”
In 1991 it was the third-most-popular subject — behind the big two, English and mathematics — with almost 20,000 students enrolled.
Last year, economics barely limped into the top 25, with little more than 5,000 learning the basics of supply, demand and prices.
Growing divide between private and public schools
The central bank is particularly concerned about the growing divide between the uptake of economics in public vs private schools.
“It’s more likely to be offered at selective or private schools,” Dr Ellis said.
But the Reserve Bank is doing something about it.
“We’re sending Reserve Bank staff to schools to talk to students and give presentations on recent economic developments,” Dr Ellis said.
“He have teacher immersion events to help improve the curriculum and make it relevant and engaging for students.”
The central bank is effectively on an economics advertising campaign, even pushing the financial rewards the discipline offers to those who continue on to tertiary study.
“Students who have graduated from economics degrees tend to have quite high starting salaries even if they are not actually working in a job titled economist,” Dr Ellis said.
The ‘dismal science’ rebooted
ASIC claims part of the higher uptake of economics among private school students relates to parental lobbying efforts.
“They’re responding to the needs of the students, and what the community is looking for, what they’re asking for,” Ms Higgins said.
“Parents expect kids to have certain experiences at school and they talk to schools about what their kids should getting at school every day.”
The RBA also believes having a sound grasp of economic concepts makes for a better democracy.
“Having a sense of how many jobs is a lot, how much money is a lot compared to the size of the economy,” Dr Ellis said.
“These are the sorts of sense of scale that are actually really helpful to have in assessing the flow of news that’s coming to you.”
One thing seems clear; if students of all persuasions are offered the opportunity of learning about the “dismal science” — a term Scottish historian Thomas Carlyle coined to describe the discipline of economics — it seems they are all too keen to keen to participate.
The latest OECD PISA survey of 15-year-old Australian school students revealed most indicated they wanted to learn about money and wanted to learn about money at school.