Economics who needs it?
Actually everyone needs to understand the economic principles that guide our lives. High school graduates are quickly tasked with many, life-shaping questions: Do I go straight to work? Do I attend a vocational technical school or a college/university? Do I continue to live at home or find my own place? Should I buy a car and insurance? Do I save for my education or take out student loans? Can I balance a checkbook? Open a savings account? Complete a loan application?
In data from a 2015 U.S. government report, the average student loan debt was $35,000, up 76 percent since 2009; the average household credit card debt was $15,609; and, the average household mortgage debt was $156,706. Part of the problem is the ready availability of credit and the ease with which one can live above their means. Do you suppose there is another reason? Could it be that many young people are graduating or have graduated without a critical awareness of the basic principles of economics?
Economics is about earning and spending money; using resources to satisfy needs and wants; growing businesses, savings accounts, interest rates, credit cards, taxes, insurance; and, economic policies that shape our country and other countries around the world. Concepts like free markets, supply and demand, property rights, market competition, voluntary exchange, self-interest, scarcity, choice, innovation, and entrepreneurship are an integral part of economic education.
The Colorado Standards for Economic Education are: “Understand the allocation of scarce resources in societies through analysis of individual choice, market interaction, and public policy” and “acquire the knowledge and economic reasoning skills to make sound financial decisions.” There are specific goals for each grade beginning in preschool and kindergarten through 12th grade. Students are to be able to describe producers and consumers and how goods and services are exchanged; define a capitalist market economy, describe how the scarcity of resources affects the choices of individuals and communities; how supply and demand influence price and profit in a market economy; identify how government and competition affect markets; understand the relationship between choice and opportunity cost; and, analyze strategic spending, saving, and investment options.
The goals set out in the Colorado Economic Standards are laudable; however, it appears most students leaving high school fail to demonstrate competency in economic education. Although there is no required standardized test for economics, the statistics quoted above indicate a lack of economic understanding by far too many people.
Do you think students should know research has found that the burden of student debt hinders innovation and entrepreneurship? Do you think students should be taught how credit card debt affects households’ ability to live fully in the present or plan for the future? Cristian deRitis, who analyzes consumer credit economics for Moody’s Analytics said in speaking of the public’s debt-to-income ratio, “The impact on future economic growth could be quite significant.” Students without the knowledge of economic principles or lacking the ability to apply economic reasoning will be at a decided disadvantage.
Understanding economic principles helps citizens make more informed choices not only with their own lives but also as a voting member of society. Citizens with a solid knowledge of economic principles know that the government has no way of acquiring money except by printing money in the case of the federal government or taking money from its citizens through taxation. Economically savvy citizens recognize the importance of private enterprise and understand a healthy economy requires all able-bodied individuals, not just a few, to work and pay taxes.
Teachers are expected to teach more concepts all the time. Adding economic standards to the already demanding standards for which teachers are accountable must at times seem overwhelming. Fortunately there are a number of resources in this community that are willing and able to assist teachers. Several of the local banks have wonderful economic education programs, online curriculum is available for elementary grades through high school, and other local entities can help with speakers and materials.
The Freedom and Responsibility Education Enterprise, a.k.a. FREE Foundation, and the Foundation for Economic Education, a.k.a. FEE, hosted the second annual Western Slope Economic Leadership Conference at the CMU ballroom on Nov. 9. Juniors in high school were the target audience, and approximately 150 students and teachers from 10 Western Slope high schools plus home educated students attended the all-day conference. The conference will be an annual event. Let’s help students acquire economic knowledge.
Phyllis Hunsinger is president of FREE Foundation.