The
Hawaii Council on Economic Education completed a survey with
SMS Research in July 2003 to assess the economic and financial
literacy of Hawaii's workforce, age 16 and over. Overall,
the typical respondent scored 65 percent on the survey, answering
12.96 of 20 questions correctly. Question topics ranged from
the effects of rent control to the distribution of gains from
international trade to the function of money.
A disconcerting finding was that 27 percent could not
answer even half of the question correctly. In a more positive
light, about 32 percent correctly answered 75 percent of
the survey. Interesting demographic results include ethnicity
and age differences. Individuals identifying with Caucasian
or Chinese ethnic backgrounds did quite well, answering
14.99 and 14.57 (respectively) out of the possible 20 correctly,
while individuals identifying with Filipino or Hispanic
ethnic backgrounds answered less than 10 correctly on average.
Of equal concern, individuals identifying as native Hawaiians
or part native Hawaiians answered only 11.30 of the 20 questions
correctly. It seems evident that these populations could
benefit from additional economic and financial education.
As for the age distribution, the younger groups, ages
16-19 and 20-29 on average answered only 10.36 and 11.88
out of 20 correctly, while the older groups, 30-39, 40-49,
and 50-59, performed above average, with mean scores of
13.20, 13.78, and 13.42, respectively. This outcome is not
particularly surprising as age brings forth experience,
and the confrontation of economic and financial choices.
The younger groups have not yet been faced with the same
sort of major financial decisions as their elders, so it
is reasonable that they would possess less knowledge in
these areas.
One final demographic finding worthy of mention is the
relative performance of respondents who took a college course
in economics. As expected, those who took an economics class
in college answered well above the mean at 14.73 questions
correct, while those who did not scored an average of 11.97
questions correct.
One particularly surprising result was obtained when respondents
were asked about the function of the stock market. Almost
a fourth of the survey sample (94 out of 409) answered "do
not know" when asked about the function of the stock market.
Another question of note concerned the effect of increased
competition in an industry. Economic theory tells us that
an increase in competition in a particular industry should,
everything else unchanged, result in lower prices and higher
quality. However, more respondents (173) believed that quality
would fall, compared to the 153 who correctly answered that
quality would increase. Perhaps the most unexpected responses
were to the question concerning inflation. While 168 respondents
understood that people who borrowed money at a fixed rate
of interest would benefit from inflation, another 127 thought
banks that loaned at a fixed rate would gain, while another
33 believed that people living on fixed incomes would have
an advantage during inflationary times.
Overall, the survey suggests that Hawaii's workforce has a modest understanding of economics and basic finance. While the results don't have the engines leaving the firehouse yet, they do indicate there are significant gaps in knowledge. Emphasis should be placed on providing improved economic and financial education within underserved minority communities and on enhancing both the quality and quantity of economic and financial education in Hawaii's private and public schools.
