Teaching Economics to Everyone

I am wondering if economics is a subject that everyone should know something about. I wonder if economics should be taught in high school so that everyone with even a high school diploma would have some exposure to economics some political economy.

What prompted this thought are a couple of interesting pieces about the general public’s knowledge of economics. The first piece was a Wall Street Journal Econoblog with Russell Roberts and William Polley. Here is an excerpt (Roberts addressing Polley):

Bill, in your last post, you mentioned the depressing (and seemingly inevitable) conceptual mistakes that the media makes when discussing natural disasters like Katrina. Why do you think that is? The obvious answer is that most members of the media have little or no economics training. True, but I suspect the reason for that lack of knowledge is that there's little or no demand for it. The average citizen doesn't understand the economic way of thinking, so bad economic writing is rarely punished.

For better or worse, understanding economics isn't a particularly useful investment of time and energy for most people. Understanding the true impact of Katrina or the true impact of price controls on gasoline in the aftermath of Katrina isn't valuable to the average person.

Read the whole article.

A second essay is from Atanu Dey and it is his attempt to explain the way economists think. Here is a nice excerpt:

Studying people exercising choice is what makes economics a study of behavior. Behavior – both human and non-human – has to do with rewards and punishments, gains and losses, in other words incentives. To some, the broadest generalizations that a study of economics leads to are, first, incentives matter, and second, markets work. The rest of economics is an elaboration and detailed arguments about those two generalizations. Recalls to mind what Ernest Rutherford had said about physics: “All science is either physics or stamp collecting.” That is, physics is central and the other bits of science are just a collection of facts that are peripheral and mere detail that one should not be overly concerned with.

Economics is all about codified common sense. I think that is what draws me to economics: I like common sense and I am appalled at the lack of common sense I see around the world. Setting aside the question of why common sense is called such when it is so uncommon, one may ask why economics is difficult if what it concerns itself with is apparently so commonsensical. I think it is difficult because its simplicity is deceptive.

Read the entire article. I think all economists tend to think economics is common sense, but apparently "common sense" is only common among economists.


The common theme in these articles is that the common man is woefully ignorant about economics and harbors many dangerous misconceptions about the economy and the role that government should play in the economy. In general, there may be little motivation for individuals to really learn economics. One doesn’t really need to understand how the economy works to be able to participate in the economy and even to make a lot of money via the economy. Economic knowledge is only really useful to decision-makers. It would be extremely useful for politicians to learn more economics. But voters also need know more about the subject if they are going to cast knowledgeable votes.

I recall reading that one of the first decisions of the founding fathers of the United States was to create provisions for land to be set aside for public education. It must be understood that the motivation for public education at that time was very different than it is today. They were not thinking that this would be a good way to produce marketable skills in the population and to make poor people into more productive citizens and help them out of poverty. Helping the poor really was not a motivation. The idea was simply that they recognized that only a well-educated citizen was likely to be able to be a competent voter. I still think this is an important idea. To some extent, the problems that India has had developing its economy can be traced to the problem of having a not very well educated electorate.

When I was in high school, I was required to take a half-year course called “civics” that basically covered the government. We spent a long time reading the whole U.S. Constitution, which was knowledge that was very unlikely to be retained by any ordinary American. A better use of that time would have been a more general course covering economics and politics and culminating in some simple public policy analysis. The point of the class would be to try to train people to be better and savvier voters.

My feeling is that in high school, it is less likely that people will learn so much from studying dry theory. Younger people learn more from hands-on experience. But how do you give people hands on economics, politics, and public policy experience? Well, with computers, anything is possible. It is actually very possible to create computer models of simple economies and let the students play around with them. They would learn the way scientists do: by trial and error. And students would develop intuition about how markets work and how poor public policy could lead to serious problems.

The one really big drawback of my idea of teaching economics and public policy via computer simulation is the expense of creating the software. This would probably require several tens of millions of dollars to produce. Of course, this would only be a few dollars per student, but someone would have to fund this initial investment.

So do you think that students might profit from such a course? What are your opinions?