The relationship between multiple choice and essay response questions in assessing economics understanding

Efficiency considerations have led to increased use of multiple-choice ques tions to assess economics understanding at the secondary and tertiary level s throughout Australia. A multiple-choice test would suffice if multiple-ch oice and essay questions measure the same dimensions of knowledge, as sugge sted by least squares estimation of the relationship between these two form s of testing. We show a simultaneous equation bias inherent in least square s estimation of the relationship between these two forms. A two-stage least squares estimation reveals no relationship, implying that these testing fo rms measure different dimensions of knowledge, Thus, ii single form of test ing economics knowledge must be avoided.