The Relationship between Multiple Choice and Essay Response Questions in Assessing Economics Understanding

Efficiency considerations have led to increased use of multiple‐choice questions to assess economics understanding at the secondary and tertiary levels throughout Australia. A multiple‐choice test would suffice if multiple‐choice and essay questions measure the same dimensions of knowledge, as suggested by least squares estimation of the relationship between these two forms of testing. We show a simultaneous equation bias inherent in least squares estimation of the relationship between these two forms. A two‐stage least squares estimation reveals no relationship, implying that these testing forms measure different dimensions of knowledge. Thus, a single form of testing economics knowledge must be avoided.