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Thursday, February 5, 2009
In an earlier post I looked at a report suggesting that American youth were woefully under-educated when it comes to dealing with their personal finances. With only 21% paying off their monthly credit card bills, today's young consumers could probably benefit from a better understanding of debt and credit. But does that apply to economics more generally?
Broadly speaking, it certainly wouldn't hurt to have a more educated populace. While we're at it, it would be great if people knew advanced biology, another language and could play an instrument. But there are opportunity costs to learning these things, so the question becomes: is this important enough to include macro & micro economics in the core curriculum of secondary schools and universities? The report argues that it is.
I think a case can be made for the importance of certain economic principles. The idea of an opportunity cost, already mentioned in this post, is helpful when making decisions. Similarly, the basics of sunk costs, supply & demand, savings & investment, operating at the margin, taxation, etc, are all very relevant concepts in day-to-day life. One particularly topical issue is that of comparative advantage: the idea that Country A can be better off specializing in the production of beer and trading it to Country B for pizza, even when it can produce both beer & pizza more efficiently than Country B. I've heard econ profs talk about how it's always a real challenge to teach such a counter-intuitive idea to first-year students, and yet that's the fundamental principle behind free trade. Maybe if more people understood how comparative advantage works, "Buy America" provisions would be less popular. Maybe.
But there are other issues to consider. Take the example of the humanities (philosophy, theology, literature, classics). My own public school upbringing left me pretty under-exposed to most of these fields. I feel as though, if I had been attending Eton or Harrow in the late 19th Century, maybe I wouldn't be having to play "catch-up" on basic philosophy in my spare time. But if everyone got a more thorough training in the humanities, maybe we would have fewer people inclined to take up a trade or a job requiring hard labour. In other words, there might be unanticipated costs for more education. The same might be true for economics.
Let me put it another way. A quote from the report reads:
pretty sure less than 40 percent of PhD-trained economists know what sort of fiscal policy would produce economic stimulus. So is society better off if we have more plumbers or more economists? (I apologize to any humanist plumbers with economics training for my over-generalizations).
So to summarize, I think it would be helpful if people had more familiarity with some of the basic principles of economics - the ability, even in passing, to do what my 2nd year econ prof referred to as "putting on one's economic glasses." But those glasses have a very distinct way of looking at the world and it's very important to be able to take them off now and again. At the very least, if we're going to invest time and energy in educating our youth on our socio-political history and institutions (Civics class) then this should be complemented by an understanding of our economic institutions and how the two sets interact. But beyond that, it's not clear to me that economics is something that is so necessary as to be part of the core curriculum. Any thoughts?
(Photo: Financial Sense)
Broadly speaking, it certainly wouldn't hurt to have a more educated populace. While we're at it, it would be great if people knew advanced biology, another language and could play an instrument. But there are opportunity costs to learning these things, so the question becomes: is this important enough to include macro & micro economics in the core curriculum of secondary schools and universities? The report argues that it is.
I think a case can be made for the importance of certain economic principles. The idea of an opportunity cost, already mentioned in this post, is helpful when making decisions. Similarly, the basics of sunk costs, supply & demand, savings & investment, operating at the margin, taxation, etc, are all very relevant concepts in day-to-day life. One particularly topical issue is that of comparative advantage: the idea that Country A can be better off specializing in the production of beer and trading it to Country B for pizza, even when it can produce both beer & pizza more efficiently than Country B. I've heard econ profs talk about how it's always a real challenge to teach such a counter-intuitive idea to first-year students, and yet that's the fundamental principle behind free trade. Maybe if more people understood how comparative advantage works, "Buy America" provisions would be less popular. Maybe.
But there are other issues to consider. Take the example of the humanities (philosophy, theology, literature, classics). My own public school upbringing left me pretty under-exposed to most of these fields. I feel as though, if I had been attending Eton or Harrow in the late 19th Century, maybe I wouldn't be having to play "catch-up" on basic philosophy in my spare time. But if everyone got a more thorough training in the humanities, maybe we would have fewer people inclined to take up a trade or a job requiring hard labour. In other words, there might be unanticipated costs for more education. The same might be true for economics.
Let me put it another way. A quote from the report reads:
The study found that only 16 percent of Americans could differentiate free markets from central government planning. Less than 30 percent of those surveyed understood the relationship between taxes and government spending, and less than 40 percent knew what sort of fiscal policy would produce economic stimulus.I agree that this represents a bit of a problem, but the joke of it is, I'm
pretty sure less than 40 percent of PhD-trained economists know what sort of fiscal policy would produce economic stimulus. So is society better off if we have more plumbers or more economists? (I apologize to any humanist plumbers with economics training for my over-generalizations).So to summarize, I think it would be helpful if people had more familiarity with some of the basic principles of economics - the ability, even in passing, to do what my 2nd year econ prof referred to as "putting on one's economic glasses." But those glasses have a very distinct way of looking at the world and it's very important to be able to take them off now and again. At the very least, if we're going to invest time and energy in educating our youth on our socio-political history and institutions (Civics class) then this should be complemented by an understanding of our economic institutions and how the two sets interact. But beyond that, it's not clear to me that economics is something that is so necessary as to be part of the core curriculum. Any thoughts?
(Photo: Financial Sense)
