I'm excited to be guest editor of this issue of the California Social Studies Review because this is an opportunity to clear up many misconceptions about economics and its role in the K-12 curriculum. Let's begin by disabusing readers of some of the most common fallacies about economics. It is not boring. Economics is about the choices that your students make every day, some of which will have repercussions throughout their lives. For example, the most important financial decision your students will ever make is whether to complete high school and continue to post-secondary training or college, or to leave school without a high school degree. The difference in lifetime earnings between a high school dropout and a college graduate is well over $1 million. In addition, high school dropouts are almost three times more likely to be unemployed as college graduates. (Bureau of Labor Statistics)
Rather than jumping into a college degree program, however, students must also look at the cost and quality of the degree. Is an Ivy League degree more than ten times better than a degree from a state university? If not, perhaps the Ivy League degree is a bad choice. In fact, a two year degree, in some instances, is actually more valuable in the labor market that a four year degree. But many students who attend a "for profit" college may spend two years and leave without a degree but with a great deal of debt. The Harkin Report states that over 50% of two year degree seekers left the institution without a degree and with debt that may follow them the rest of their lives. So it is clear that more education means more income but may also mean more debt. An understanding of economics will help students use information to weigh the benefits and costs of different types of post-secondary education. This is fundamental economics and it is certainly not boring.
A second misperception is that economics is abstract, theoretical, and most important, irrelevant to students' lives. Well, to be fair, there is a theoretical underpinning to economic analysis. We begin with the fact that resources are limited and insufficient to satisfy all of our goals. I was listening to a well-know and highly-respected author giving a commencement address at a California university. I was looking forward to his address because I had read his works and greatly admired them. But he lost me with his opening statement that scarcity is a false argument because there is enough food to feed everyone in the world. This statement clearly demonstrated his misunderstanding of the concept. There probably is enough food to abolish hunger worldwide. But is there sufficient infrastructure to get the food to the hungry? Is there sufficient political stability and honesty to know with certainty that food sent to the hungry will reach the hungry? Are those of us who do not face starvation willing to give up some of our wealth to feed the hungry and, if so, are we confident that our efforts will achieve the desired end? Remember, the definition of scarcity is insufficient resources to achieve all of our goals. Feeding the hungry will take resources away from other desirable social goals such as a cleaner environment, medical research, education, public safety, etc. Or take the issue of medical care. We could provide the best medical care for all citizens, but it would take approximately 90% of all of our resources. This doesn't leave much for education or other goals!
So, recognizing that scarcity exists, is there a way to use our limited resources to maximize the well-being of our society? That is where economics comes in. Economic reasoning entails balancing the competing demands on scarce resources to achieve the best for the most. When determining how to use limited resources, it must be recognized that putting a resource into one activity necessarily means taking that resource away from the best alternative. For example, an elementary school is notified that it must develop a plan for a windfall grant it has just received. …