RDP 2021-06: What Is Driving Participation and Diversity Trends in Economics? A Survey of High School Students 1. Introduction

There has been a dramatic decline in Australia's Year 12 Economics enrolments of around 70 per cent over the past 3 decades (Figure 1). Alongside the decline in numbers, the gender balance has diminished from roughly equal numbers of male and female students in the early 1990s, to males outnumbering females two-to-one in recent years. In the state of New South Wales, for which more detailed data are available, the shares of students from low socio-economic backgrounds and regional locations have also fallen substantially (Figure 2).

The size and diversity of the Economics student population matters for both students and broader society. Economics at the high school level provides a basic level of economic literacy. While there is no one definition of economic literacy, it encompasses an ability to apply economics skills and frameworks to explain or debate much of the world in which we live – from understanding opportunity costs in our personal decisions, through to forming a view about the efficacy of economic policies. In New South Wales, and most other Australian states, the main opportunity high school students have to learn basic economic literacy is through the Year 11 and 12 Economics syllabus (Board of Studies New South Wales 2009).^[1] The syllabus teaches fundamental macroeconomic and microeconomic frameworks and concepts, equipping students to engage with current economic issues. Other subjects touch on some Economics concepts, but arguably do not provide a generalised foundation of economic literacy.^[2]

While there have been numerous studies of financial literacy relating to an individual's personal finances (e.g. Lusardi 2019), there is little evidence pertaining to economic literacy. In the Australian context, the Household, Income and Labour Dynamics in Australia (HILDA) Survey provides a financial literacy test that covers concepts that can also be considered as part of economic literacy (in particular, interest rates, inflation and money illusion). Using this test, only around half of Australian adults would be considered ‘financially literate’ (Preston 2020). This may be indicative of economic literacy more broadly. There is some evidence of adults declaring a desire for greater economic literacy; in a survey of UK residents, while nearly two-thirds of respondents had not studied any economics, three-quarters thought that economics should form part of the school curriculum (Lait 2017). Indeed, in the follow-up 2019 study, around half of the respondents wanted to increase their understanding of economics of the real world and know more about economics to help them make decisions in elections and referendums (Lait 2019).

As studying Economics is often the start of a pathway to a career in economics, the diversity of the student body ultimately shapes the discipline. Declining participation (relative to other subjects) and widening diversity gaps have also been observed for economics enrolments at Australian universities (Dwyer 2018). With economists playing an integral role in determining economic policies, there are wider social benefits when the pipeline of future economists is broadly representative of society. For example, May, McGarvey and Whaples (2014) find that male and female economists have different views on economic outcomes and policies, lending support to the notion that gender diversity amongst policymakers may be an important aspect in expanding the menu of public policy choices.

Qualitative evidence from the RBA's liaison with educators indicates that a number of factors may explain the decline in Economics enrolments. First, too few educators are equipped to teach Economics and too little relevant Australian economics content is available, providing school leaders with limited incentive to offer (or promote) the subject. Second, it has been reported that many students do not select Economics because they do not understand what it is and how it might be relevant to them. Indeed, until the COVID-19 pandemic, there had been a lengthy period in which Australian households were not exposed to a major economic contraction or the extensive economic reforms that were a feature of national debate in the 1980s and early 1990s, drawing less attention to the relevance of economics to everyday life. Third, the introduction of Business Studies to the New South Wales Higher School Certificate (HSC) in the early 1990s saw a large number of students take up the subject instead of Economics, with reports that Business Studies, which is more vocationally orientated, is perceived as being easier to learn and more helpful for employment (Figure 3).

Through this liaison, educators have provided valuable qualitative insights into some of the broad constraints on Economics enrolments. However, a comprehensive survey of students themselves was needed to gain quantitative evidence of the student demand-side factors contributing to the decline in Economics enrolments, and particularly the diversity trends. As such, the RBA commissioned a survey to ask students about how and why they choose subjects, as well as what is influencing their preference for Economics (in particular their perceptions of Economics).

The RBA-led survey also helps us fill a gap in the literature. It contains a unique primary source of data with which to examine the drivers of falling participation and diversity in economics.

Surveys (which vary in scale) of university students have found perceptions of economics to be largely negative (see Webber and Mearman (2012)). For students at Australian universities at least, economics is generally viewed as abstract, difficult, dull and boring, not relevant to the real world, lacking an ethical dimension, and not obviously associated with a high-profile profession or clear career path (Lewis and Norris 1997; Ward, Crosling and Marangos 2000; Azzalini and Hopkins 2002). At issue is the extent to which these perceptions are representative of high school students and have bearing on their subject selection.

Furthermore, while there are many studies that examine aspects of the relationship between students' characteristics and subject or careers choices, the fields of study are broadly defined. Economics is rarely separately identified. For example, studies (some of high school students and others of university students) have utilised large-scale datasets to draw associations between study choices and student characteristics. (For key Australian examples, see use of the Longitudinal Survey of Australian Youth by Fullarton and Ainley (2000), Fullarton et al (2003) and Thomson (2005)). Relatedly, there are many studies that seek to explore subject selection as part of a student's decision-making process when choosing a career. They have little to say, though, about choosing economics – either as a subject or a career (see Alloway et al (2004); Gore et al (2017); Jung and Young (2019)).

Consequently, despite there being a large body of literature that draws on surveys of students at different stages of their learning, no published research in Australia or internationally has drawn on surveys of high school students' perceptions of economics, or what determines their decision to study (or not study) economics in senior high school. This paper addresses 3 key questions:

1. Which school and individual characteristics are most strongly associated with choosing Economics?
2. What are students' perceptions of Economics?
3. What differences in perceptions of Economics exist by sex and socio-economic background?

The remainder of this paper is structured as follows. Section 2 describes the unit record survey data and administrative data that are used to estimate the model specifications that address our key questions. Section 3 describes each specification and the corresponding results, progressively controlling for more explanatory factors, shedding light on the scope for interventions and further avenues for research discussed in Section 4.

Footnotes

We distinguish between Economics (the Year 11 and 12 subject) and economics (the field) throughout the paper by capitalising the former. [1]

For example in New South Wales, the Year 11 and 12 Business Studies syllabus touches on exchange rates and interest rates in the context of businesses' financial management strategies, and economic conditions as a factor affecting consumer choice (Board of Studies New South Wales 2010). Standard Mathematics covers financial mathematics skills, which cross over with economic concepts, such as interest rates (NSW Education Standards Authority 2017). In Years 7 to 10, students may have an introduction to economics through the Commerce elective (NSW Education Standards Authority 2019); this is an avenue by which students may gain basic economic literacy, though the economics component has only become a core part of the elective since 2019. [2]