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Helping Students Make Economic Decisions
  1. 1. When was the first time you were told, "You can't have everything you
want?"
  1. 2. How do you use a credit card?
  2. 3. Are you paying for part of your education with a loan?
  3. 4. Why do you have a job, or why will you get one?
    1. 5. When have you refused to buy something because you thought the price was too high?
  4. 6. If you were going to purchase a new car, would you be tempted to examine those that you have seen in TV commercials?
7 . ...:Do you anticipate telling children in the classes you teach that they can­not have everything they want?
  1. 8. If so, what will be the next sentence you will probably say to them?
Economics is encountered every day by everyone. Chances are you cannot remem­ber the first time you were told that you could not have everything you wanted; you were most likely too young to remember this incident. But you have probably heard it over and over again since then. This frequent caution is the basis of eco­nomics. The solutions people use to get around the reality that they cannot have everything they want is the study of economics. Economics is not limited to money, although this is the way most people view it. As a student you are likely to have a shortage of money, but you probably feel the shortage of other things as well, and perhaps even more. This chapter examines ways to help students understand the role of economics in their lives, their families' lives, their community, their nation, and the world. It also focuses on the process of making rational personal and group


Standards VII, VIII, IX
decisions about the use of the world's scarce resources. This chapter will give :rm: ideas on how to approach teaching the NCSS standards Production, Distributio and Consumption; Global Connections; and Science, Technology, and Society.





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  1. 1. Clarify the differences between microeconomics and macroeconomics.
    1. 2. List the key concepts for the study of economiGs and of economic decision making.
    2. 3. Explain why scarcity and decision making (cost-benefit analysis) are consid­ered the key to economic understanding.
    3. 4. Explain how to use the economic decision-making model with students.
      1. 5. Explain how economics influences the lives of all people, communities, and nations.
      2. 6. Explain how interdependence impacts all nations bringing them benefits from economic cooperation and how a lack of cooperation works against some
nations and for others. :-
  1. 7. Identify ways in which economic education is integrated into the social stud­ies curriculum through such topics as career education, geography, history,' community studies;and consumer education.
  2. 8. Reflect on the ways in which economic education is authentically taught and assessed.
  3. 9. Locate potential resources for teaching economics to students.
    1. 10. Examine ways to use computers to teach economics.
The National Assessment of Educational Progress (NAEP) does not have a test for economic literacy. However, in 1999 the National Association of Economic Edu­cators (NAEE) tested adults and high school seniors on fundamental economic con­cepts. Half the adults and two-thirds of the high school students failed, showing a lack of understanding of fundamental concepts such as money, inflation, and scarcity. Of the high school students, 35 percent admitted that they did not know what effect an increase in interest rates would mean. Just over half (54 percent) of the adults and fewer than a quarter ofthe high school students knew that a budget deficit occurs when the federal government's expenditures exceed its revenues for the year.
Many people in the United States have high rates of personal bankruptcies, large credit card debts, and no savings or investments. At the same, time, others are reaping financial rewards for investing. Such findings are spurring a national campaign for economic literacy and the promotion of more economically sound be­haviors in which social studies education has a major role.


Nancy Braden, long an Arkansas elementary teacher, relates how she became an eco­nomic educator and the approaches she recommends for teaching economics.
Interviewer: Nancy, you are one of the most successful teachers of economics to young people in the country, having won multiple awards for your teaching over the years. How did you get started teaching economics?
Nancy Braden: I went to a workshop given in my school district by the Arkansas State Council for Economic Education. I anticipated just getting my in-service points, not ever dreaming I'd get interested in it or care anything about it. I planned to be bored for that week. I can't tell you now what was said, but whatever it was, it turned me on, and be­fore it was over, I was planning what I'd do the next year.
Interviewer: You tell me that you didn't remember a lot. of what you were told. Nancy Braden: Not in that one week. No.
Interviewer: Well, I hear your students talking about such complex conce,pts as aggre­gate demand, profits, supply and demand, and investing. How did you learn all this in­formation that you now teach?
Nancy Braden: I got the materials they [the Arkansas State Council for Economic Education] had published-the state curriculum guide. I got down and studied it. I was used to preparing my own units because we didn't have any social studies text­books. I've never been one to use a textbook anyway, except as a guide and resource. Over the years, I've read lots of other books and articles and gone to other workshops and meetings, too. Plus I learn new things and more economic understanding with each unit I teach.
Interviewer: You are now teaching social studies in a departmentalized situation. How do you work the economics into your district curriculum?
Nancy Braden: Well, it just fits in. You couldn't teach social studies without it. There is just no way. All the direct areas and people we study from fourth through the sixth grade-all of them can't be understood without economics. You've got to study how the people live, how they meet their basic needs-food, clothing, and shelter. You've got to study their economy, their government. You can't study any of this without eco­nomics. There is no way to study any social studies without including economics, and
I highlight a lot of it.
This year we've studied a lot about recycling. We are finding out that it is quite expensive to buy recycled materials, but since our opportunity cost is to ruin our country, we've got to do something. It's going to cost us, so we might as well pay for it now. We saved 26 trees in the last 9 weeks of the school year by collecting paper for recycling. We learned that in some cities and states people are required to recycle and that some local govern­ments are making money by selling the recyclable materials, which is helping to pay for local services. That helps to keep from increasing taxes.


Interviewer: You just named a lot of economic concepts, and I've noticed they are an in­tegral part of your vocabulary. How important is this set of economic concepts to your teaching?
Nancy Braden: Very, very. I've heard other teachers say they've had a hard time getting the concepts across, but I don't find that at all. I call the students entrepreneurs, and they want to know what I called them. Their parents may not know what the word means, but the students learn it, and how to spell it, and they think they are hot stuff. They get excited, and I'm excited. So I think the kids catch my enthusiasm.
Interviewer: Do you teach all the concepts first and then do your study of the economic problem?
Nancy Braden: I kind of do it all together. When I was teaching in a self-contained
room, I mentioned economic concepts in all the subjects. Whenever there is an example of one of the concepts, I make certain that the students call it by the proper economic term. One year a co-worker told me that I was leaving out spelling, English, and math. Well, when we got back the results of the state test, my students had made a much larger gain in those areas than her students. It wasn't because I had smar..J:-er students; it was be­cause they all got turned onto learning by the economics. They saw the connection be­tween learning and real-life activities. The classes pull together in the study, and it
carries over to other work as well. One thing I like is that it works well with all kids, the fast and the slow, and it has meaning for them and their families. When you say some­thing that is going to affect them, they want to know about it.
Interviewer: So you make an extra effort to point out how what you are studying di­rectly or indirectly affects your students, and you tend to use an in-depth examination of a particular problem each year?
.Nancy Braden: Yes, usually. This year we did the ecology emphasis. We organized the whole school to put things into the recycle box. Recycling places used to pay for the newspapers; they don't now. But we weren't doing it to make money. We were doing it to teach the kids something about the wise use of resources. Instead of counting money, we took the total weight of the paper and figured out how many trees would need to be cut down to equal that much paper. That is how we know we saved 26 trees.
Interviewer: It sounds like you study a different problem or question each year. What are some of the other topics you've investigated with your classes?
Nancy Braden: The Economic Impact of Pets was my favorite. I loved that one. The Economic Problems of the Local National Park illustrated many interesting economic dcisions and gave us the opportunity to learn about some careers working with govern­ment other than being a politician. The Cost of Crime study started because someone would drop a pencil and another student would take it and use it. Then the students would get into arguments concerning to whom the pencil belonged. We talked about tak­ing something that belonged to another and why private property and government proerties are important and should be respected and cared for by everyone. We'also studied the interdependence of Barling, the small community where the school is located, and Fort Smith, the neighboring big city.


Interviewer: What was your first award-winning study?
Nancy Braden: It was called "The Economic Growth of an Industrial-Centered Community." It was a study of Fort Smith, Arkansas, where most of the parents work and shop.
Interviewer: Sounds like a topic where you would use lots of resource people.
Nancy Braden: Oh yes, I used a lot of fathers in that one. Later, I heard that the fathers started calling one another to see whether they were being invited to come to the class. I usually have visits from a banker and stockbroker. We've even had the governor. The gov­ernor had another appointment, and his aides kept trying to get him to leave, but he kept saying, "Just one more question." He was impressed because the students asked him specific questions about his economic policies and programs. Sometimes visiting speakers tell me that they don't think they can get to the low level of the children's understand­ing, but when they leave, they often say that they were afraid they didn't have good enough answers for the students.
Interviewer: Well, the school year has just finished. Do you know what you'll be studying in depth next year?
Nancy Braden: I think we will continue with the ecology and recycling stud¥. There were a number of things we didn't have time to investigate. But I'm always open to a new topic and watch the news for possibilities. I enjoy the challenge of learning new things each year and gaining a greater understanding of economics at work in our nation and world.
Interviewer: I want to thank you for your time and explaining how you present econom­ics to students. Through your enthusiasm and efforts you are making an important invest­ment in your future and in the lives and futures of the human resources lucky to have you for their teacher.
  1. 1. Ms. Braden says that economics "just fits" into social studies. How can economics fit into a study of your state?
  2. 2. What are economic decisions a person and a community can make concerning ecol­ogy and recycling?
  3. 3. Who are some local guest speakers who could help explain the role of economics in the growth of communities in your state?
Several different groups of professionals deal with the economy, and they do not al­ways agree on the goals for economic education. One group is composed of


academics, who look at economics as a rational study of concepts, their relation­ships, and the decision-making process. Another group is composed of members of the business and labor communities who see economics as related to the impor­tance of work, jobs, and production. A third group is the consumer advocates, who seek to help individuals learn how to get accurate information to make personal decisions. A fourth group is the conservationists, who seek to save natural and human resources from exploitation by what they claim is ignorance at best and a conspiracy at worst. The emphasis found in the economics curriculum of a partic­ular state or school district tends to reflect the views of the economic education leaders in the community or state. All the groups agree that teaching economics is important, but what to teach and emphasize and how to instruct students are sources of much controversy.
Economics is based on the realization that people want more than the re­sources available can provide. Scarcity is the term economists use to indicate the imbalance of wants and resources. For some, the goal and definition of economic education centers on the analysis of how goods and services get produced and dis­tributed. Others stress examining ways to make the system of ,Droduction and dis­tribution work better through the formation of governmental and business policies. Perhaps the most inclusive definition is the one that defines economics as both a set of knowledge and a way of thinking (Banaszak, 1987).
Economics as a body of knowledge includes the concepts, generalizations, and theories developed by people to try to extend their scarce natural, human, and cap­ital resources so that they can fulfill their basic needs and as many of their wants as possible. An important key to the accomplishment of this goal is a systematic way of thinking and making economic decisions. Economic educators today recom­mend an in-depth understanding of scarcity and the influence of incentives and strategic thinking about how scarcity applies to personal examples and to the more complex and morally difficult issues in the international realm. Scarce resources have at least two valuable uses, and people are willing to make a sacrifice to ob­tain them. Enti~ely giving up one use is the sacrifice because the other use is con­sidered more important or satisfying.
The National Council on Economic Education (NCEE) promotes and evaluates economic education. In recent years, changes in curriculum and technology and the collapse of command economies such as that of the Soviet Union have resulted in new efforts by the NCEE. Five trends in economics education have been identified by Nelson (1997):
  1. 1. Economics and citizenship education
    1. 2. Economic education in Russia and Eastern Europe
    2. 3. Consideration of the importance of the global economy
      1. 4. Content standards
      2. 5. Use of computer technology in economic education
Economists have made a continuous and long-term commitment to increasing and improving the teaching of economics, producing guides, standards, and in­structional materials. They also evaluate their successes and failures. 'The human


resources of economists, businesses, and educators are organized through state councils and centers of economic education. These organizations raise funds for se­lected projects that produce many high-quality supplemental instructional mate­rials for grades K-12, applying the results of research into how economics is learned. Today, NCEE and its state councils and economic education centers con­tinue to work to fulfill new needs in economic education, providing training for both prospective and veteran teachers.
National social studies Standard VII: Production, Distribution, and Consumption focuses on the study of economics. All the remaining standards include considera­tion of aspects of economics. Standard IX: Global Connections and Standard VIII:
Science, Technology, and Society are closely related to the current changes in the economy of the world. Throughout history, and across the world, people have had wants that exceeded their limited resources. People have tried, through decisions by rulers, inventors, and workers, to answer four fundamental questions: