Enhancing Economic Literacy through Causal Diagrams

TL;DR

This paper introduces a novel instructional approach using causal diagrams to improve economic literacy, demonstrating effective teaching activities that enhance understanding of complex economic relationships.

Contribution

It develops and tests causal diagram-based instructional activities, providing a new method for teaching economic concepts beyond traditional lectures.

Findings

Causal diagrams improve student understanding of economic relationships

Structural debriefing enhances engagement with economic models

Effective in teaching national income and multiplier concepts

Abstract

A literacy-targeted approach to economic instruction draws on insights from cognitive science. It highlights that students process complex economic information by constructing and modifying schemas that represent economic material. Following this approach, we developed a set of instructional activities centered around causal diagrams that promote a deeper understanding of economic topics beyond the traditional lecture-based methods. Our results show that structural debriefing activities can be used effectively to introduce students to the causal diagrams that explain key economic relationships in the national income model, government-purchases multiplier and tax multiplier.