The study involving six Philadelphia schools was designed to validate the Circle Test of Honesty as a prescreening technique for identifying candidates for placement in emotionally disturbed (ED) classes. A search of the literature revealed a lack of research correlating moral judgment with identification of disturbed children or with rate of school progress but did turn up literature on the following related areas: emotional growth and intervention techniques, school skills and acceleration of progress rates, teacher identification of children with general need for special placement, occupations and how children can be helped in occupational choice based on their socioeconomics or self concept, morality education and identification, and delinquency. To prove that honesty as measured by the Circle Test can be a major determinant in whether or not a child needs special class placement, children who were considered by their teachers not to be ED were given the honesty test and compared to those who were suspected of being ED by their teacher or a psychologist. Findings included that children who have emotional problems that are severe enough to need psychological examination lack the moral judgment that the average child possesses; that children who are placed in self contained ED classes improve in school skills over those who are referred by teachers but not placed by a psychologist; and that levels of aspiration as measured by vocational choice do not appear to influence the rate of progress in school skills. Appendixes, which make up half the document, include a sample copy of the test battery, statistical tables, a sample permission letter to parents, a report on diagnosis and treatment of ED children, definitions, a critique of the test battery, and a chi square table and proof. (SBH)