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Common Sense:
Economics for Life!
Course
Presenter 1
Turn on the learning light!
Presenter 2
Presenter 3
Common Sense:
Economics for Life!
Course
Turn on the learning light!
 Workshop
Overview
Agenda
 Introductions
the room
around
Turn on the learning light
 Focuses
on what students need to
know to make sound decisions as
individuals and citizens
 Addresses
how markets and political
processes work
 Addresses personal finance and
economics
 Uses
technology to excite and
motivate the multi-media generation
of students to learn
Revealed Preferences: Multi-media
Generation of Students (8-18)
 TV
remains the dominant type of media
content consumed, at 4:29 a day.
 It is followed by:





Music/audio at 2:31;
Computers at 1:29;
Video games at 1:13;
Print at 0:38, and
Movies at 0:25 a day.
Multi-media Generation (8-18)
 Time
spent with every medium other than
movies and print increased over the past
five years:




0:47
0:38
0:27
0:24
a day increase for music/audio
for TV content
for computers, and
for video games.
Reference: Rideout, V. J., Foehr, U. G., & Roberts, D. F. (2010).
Generation M2 : Media in the lives of 8 to 18 year Olds.
Retrieved from Kaiser Family Foundation at
www.kff.org/entmedia/upload/8010.pdf
This course is fun!




Common Sense
Economics (2010) by
Gwartney, Stroup, Lee
and Ferrarini, St. Martin’s
Press
Economical (Hardback
$15.95 and Kindle $10.99)
Concise
Divided into four parts:
key elements of
economics; institutions for
prosperity; economics of
political decision-making;
personal finance
Learning light, cont.
 Stresses
reasoning rather than mechanics
 User-friendly, well-organized, and easy to
understand
The package is ready to go!
It contains everything the instructor
needs to teach economics and
personal finance.
History behind the package
 U.S.
is a nation of many economic and
personal finance illiterates.
 Six master teachers came together to help
change this.
 They decided to focus on those students
who may take only one
economics/personal finance course.
 For over five years, the specialized expertise
and dedicated work has been used to
design, implement and improve on this
successful course package.
Yes!
 It’s
easy for instructors and administrators
to say “Yes” to Common Sense:
Economics for Life! for high school and
college students.


The course is now offered successfully at
universities, community colleges, and high
schools.
The course connects to national standards
and benchmarks.
Sample Adoptions
 Florida
State University
 Northern Michigan University
 Florida Department of Education
 Wake Forest Community College
 Detroit Public Schools
 Macomb Intermediate School District
Offered in a variety of
classroom settings
 Face-to-face
 Online
 Blended
 Satellite
(F2F)
F2F Classroom Activities
 Classroom
lessons have been identified
for each core module.
 Support is provided by the Council on
Economic education and the Fraser
Institute.
 Most lessons are selected from Virtual
Economics which may be purchased
through your state council or the Council
on Economic Education
Overview: The Core Package








Pre- (and-post) test of economics and survey
attitudes toward markets and government
15 learning modules built around key concepts
15 sets of discussion board questions and
answer keys
High quality videos, podcasts and classical
and contemporary readings
15 practical assignments
4 supplemental units
10 controversies in economics
2 comprehensive test banks for randomly
generated quizzes and tests of 60 concepts
Each module provides
1. High quality pre-learning questions to get students
thinking about relevant issues
2. Key concepts and learning objectives
3. Power Point learning guide
4. Read, watch and listen
5. Practical assignment
6. Act: Quiz or exam
7. Act: Post-learning responses using the economic
way of thinking to improve initial reply. References
expected.
8. Act: A transition to bring students immediately into
the next module
Common Sense Economics:
Four Themes
Part I. Twelve Key Elements of Economics
Part II. Seven Major Sources of Economic
Progress
Part III. Economic Progress and the Role of
Government
Part IV. Twelve Key Elements of Practical
Personal Finance
Part I. Twelve Key Elements
of Economics
20
The Twelve Key Elements of
Part I will…
 Provide
a bridge between common sense
and basic principles of economics.
 Help
you begin to think economically.
 Provide
important insights regarding how
the world really works.
Part I. Twelve Key Elements of
Economics
1. Incentives matter.
2. There is no such thing as a free lunch.
3. Decisions are made at the margin.
4. Trade promotes economic progress.
5. Transaction costs are an obstacle to
trade.
6.Prices bring the choices of buyers and
sellers into balance.
Part I. Twelve Key Elements of
Economics
7. Profits direct businesses toward activities
that increase wealth.
8. People earn income by helping others.
9. Production of goods and services people
value, not just jobs, provides the sources of
high living standards.
Part I. Twelve Key Elements of
Economics
10. Economic progress comes primarily
through trade, investment, better ways of
doing things, and sound economic
institutions.
11. The “invisible hand” of market prices
directs buyers and sellers toward activities
that promote the general welfare.
12. Too often long-term consequences, or
the secondary effects, of an action are
ignored.
Part I. Module 1
 Watch
 Slice
of Life
 Read

CSE pages 5-13 (Sections 1.1, 1.2, and 1.3)
 Watch

3 videos
 Listen

and/or Read
4 items
 Slice
of Life videos
 We believe this series will help keep students
focused on the key points, stimulate their
interest in the readings, videos, and audios of
each module, and illustrate why it is important
to integrate the economic way of thinking into
our lives. Plus, it will help make economics
more exciting in both seated and online
classes, which will enhance the learning of our
students.
 CSE
pages 5-13
(Sections 1.1, 1.2, and 1.3)





What are incentives?
Why are examples of how changes
in incentives change behavior?
Is free medical care or free education
“free?”
What are marginal decisions?
Can you think of a new example of a
marginal decision?
3
videos:
 CSE 1.1 Freakonomics- Potty
training incentives (3:33)
 CSE 1.2 Solman- Opportunity cost
(5:45)
 CSE 1.3 Learn Liberty- Thinking at
the Margin (3:52)
 All
videos are made available to
instructors as stand-alone files that
can be played directly from a
computer in the classroom (Apple
and PC) or streamed from Critical
Commons
 All videos are captioned for ADA
compliance
4
items:
 CSE 1.1 “The Power of Incentives” by
Dwight Lee (Audio 8:19 minutes)
 CSE 1.2 “The Road Not Taken” by
Robert Frost (Audio, 1:39 minutes)
 CSE 1.2 “Opportunities and Costs” by
Dwight Lee (Audio, 8:45 minutes)
 CSE 1.3 “Markets and
Marginalism” by Dwight Lee (Audio,
7:58 minutes)
 Practical
assignment
 Quiz (or exam)
 Discussion board
 Get ready for the next module
Let’s take a closer look
 Visit:
CommonSenseEconomics.com
 Instructor Resources Tab
 Workshops Tab
 Enter the demo site.
 Look at Modules 1, 5, 8 and 12
 Turn to your right and left. Offer
assistance or seek help.
DEMO SITE
Part I. Module 2
 Watch
 Slice
of Life
 Read

CSE pages 13-21 (Sections 1.4, 1.5, and 1.6)
 Watch

4 videos
 Listen

and/or Read
2 items
Part I. Module 3
 Watch
 Slice
of Life
 Read

CSE pages 21-29 (Sections 1.7, 1.8, and 1.9)
 Watch

5 videos
 Listen

and/or Read
2 items
Part I. Module 4
 Watch
 Slice
of Life
 Read

CSE pages 30-39 (Sections 1.10, 1.11, and
1.12)
 Watch

4 videos
 Listen

and/or Read
1 item
Part II. Seven Major Sources of
Economic Progress
Part II. Seven Major Sources
of Economic Progress
1.
2.
3.
4.
5.
6.
7.
Legal System
Competitive Markets
Limits on Government Regulation
An Efficient Capital Market
Monetary Stability
Low Tax Rates
Free Trade
Per Capita Income: The last 1000 years
• Income stagnated for the 800
years following year 1000,
but growth has exploded
during the last 200 years.
• (Measured in 1990 dollars)
world per capita income was
$667 in 1820 – only about
50% higher than year 1000.
By 2003, however, income
had risen to $6,516 – 10
times the level of 1820.
• During the past 200 years,
the income growth of the
high-income industrial
countries (West) has grown
even more – nearly 20 fold.
$25,000
GDP Per Capita
2003: $23,710
$20,000
West GDP per capita
$15,000
2003: $6,516
$10,000
World GDP per capita
1820: $1,202
$5,000
1820: $667
1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2003
Part II. Module 5
 Watch
 Slice
of Life
 Read

CSE pages 45-57 (Sections 2.1 and 2.2)
 Watch

6 videos
 Listen

and/or Read
3 items
Part II. Module 6
 Watch
 Slice
of Life
 Read

CSE pages 57-73 (Sections 2.3, 2.4, and 2.5)
 Watch

5 videos
 Listen

and/or Read
1 item
Part II. Module 7
 Watch
 Slice
of Life
 Read

CSE pages 73-89 (Sections 2.6 and 2.7)
 Watch

6 videos
 Listen

and/or Read
2 items
Lunch Time
Afternoon
 Good



afternoon!
Are you ready?
Engaged?
Any thoughts to share?
Part III. Economic Progress and
the Role of Government
Part III. Economic Progress
and the Role of Government
1.
2.
3.
Government promotes economic progress by
protecting the rights of individuals and supplying a
few goods that are difficult to provide through
markets.
Allocation through political voting is fundamentally
different from market allocation, and economic
analysis indicates that the latter is more consistent with
economic progress.
The costs of government are not only taxes.
Part III. Economic Progress
and the Role of Government
4.
5.
6.
7.
Unless restrained by constitutional rules, special-interest
groups will use the democratic political process to
fleece taxpayers and consumers.
Unless restrained by constitutional rules, legislators will
run budget deficits and spend excessively.
Government slows economic progress when it
becomes heavily involved in providing favors to some
at the expense of others.
The net gain to those receiving government transfers is
less, and often substantially less, than the amount they
receive.
Part III. Economic Progress
and the Role of Government
8.
Central planning replaces markets with politics, which
wastes resources and retards economic progress.
9. Competition is just as important in government as in
markets.
10. Constitutional rules that bring the political process and
sound economics into harmony will promote
economic progress.
Part III. Module 8
 Watch
 Slice
of Life
 Read

CSE pages 95-106 (Sections 3.1, 3.2, and
3.3) and “The Economics of Market Failure”
 Watch

5 videos
 Listen

and/or Read
1 item
Economic Efficiency


Economists use the
standard of
economic efficiency
to judge economic
outcomes.
Both governments
and markets have
problems with
efficiently allocating
resources.
Two Key Roles for Government
 Protection
of property rights
 Production of public goods - - goods that
if they are available to one person, they
are available to everyone and it is
impossible to restrict consumption to only
those who pay.
Market Failure


Markets fail due
externalities - - Costs
or benefits imposed
on a non-consenting
third party.
Negative
externalities:
Pollution, traffic,
noise, over-fishing,
and so forth.


Positive externalities:
A freshly painted
home or a scientific
breakthrough.
There may be a role
for government in
reducing negative
externalities.
Government Failure
•
Nobel Laureate James
M. Buchanan introduced
the idea of “government
failure.”
–
Government failure
occurs when a
government intervention
causes a more inefficient
allocation of goods and
resources than would
occur without that
intervention.
How Governments Fail
 Special
interest group effect
 Shortsightedness effect
 Government does not allocate based on
mutual consent;
 Voters makes choices based on a
“bundle” of positions held by a candidate
Let’s Go Shopping!
 Political
vs. Market Allocation
 Demonstration lesson
 Allocation through voting is fundamentally
different than market allocation
Rate the Items in Carts 1 and 2




Rate your cart:
10 = You really desire
the item; gain a lot if
you pay the price.
-10 = You would be
extremely unhappy
being forced to
purchase the item at
any price.
0 = You are indifferent
to having the item.
And the Winner Is?





Which cart had the
highest value?
Everyone receives
the items in the
winning cart!
That’s the
democratic solution!
How do you feel
about that?
What might we be
able to conclude?
 Decisions
made
using democratic
processes do not
always make
individuals better
off.
Imagine Cart 3





Pretend you have $75
and a new, empty cart 3.
Browse the items in cart 1
and 2 that you placed a
high value on -- 5 or 10
rating.
Total up the value (not
the prices) of your items.
Purchase the ones you
want by circling the price.
Don’t spend over $75.
Total up what you paid.
 What
did cart 3
cost?
 What might we
conclude from
your cart 3
choices?
So which method of choice is
most economically efficient?
The market method of choice
appears to be the most economically
efficient in that gives us the greatest
value at a lower cost.
Is this an unusual result?
Other Results
Part III. Module 9
 Watch
 Slice
of Life
 Read

CSE pages 106-115 (Sections 3.4 and 3.5)
 Watch

4 videos
 Listen

and/or Read
1 item
Part III. Module 10
 Watch
 Slice
of Life
 Read

CSE pages 115-131 (Sections 3.6, 3.7, and
3.8)
 Watch

5 videos
 Listen

and/or Read
2 items
Part III. Module 11
 Watch
 Slice
of Life
 Read

CSE pages 131-143 (Sections 3.9 and 3.10)
 Watch

4 videos
 Listen

and/or Read
0 items
Part IV. Twelve Key Elements
of Practical Personal Finance
Part IV. Twelve Key Elements
of Practical Personal Finance
1.
2.
3.
4.
Discover your comparative advantage.
Be entrepreneurial. In a market economy, people
get ahead by helping others and discovering
better ways of doing things.
Use budgeting to help you save regularly and
spend your money more effectively.
Don't finance anything for longer than its useful
life.
Part IV. Twelve Key Elements
of Practical Personal Finance
5.
6.
7.
8.
Two ways to get more out of your money:
Avoid credit-card debt and consider purchasing
used items.
Begin paying into a "real-world" savings
account every month.
Put the power of compound interest to work
for you.
Diversify- don't put all of your eggs in
one basket.
Part IV. Twelve Key Elements
of Practical Personal Finance
9.
10.
11.
12.
Indexed equity funds can help you beat the
experts without taking excessive risk.
Invest in stocks for long-run objectives, but as
the need for money approaches, increase the
proportion of bonds.
Beware of investment schemes promising high
returns with little or no risk.
Teach your children how to earn money
and spend it wisely.
Part IV. Module 12


Watch
 Slice of Life
Read


Watch


CSE pages 149-161 (Sections 4.1, 4.2, and 4.3)
7 videos
Listen and/or Read

There are no additional audios or readings in
the personal finance part of this course. You are
now asked to put your new knowledge to work.
So expect an increase in the number of
assignments. Plan accordingly.
 Assignment
12.2 “Zero-based Budgeting
Guide”
 Trade-offs, opportunity costs, spend, save
and invest for now and the future
Budgeting Basics (1)
Gross annual income:
$40,000
What your net annual takehome pay?
Monthly net take-home pay?
Bi-weekly or net take-home
pay every two weeks?
Federal income taxes: $940
a year
Payroll tax deductions:
$3060 a year (7.65%)
Scavenger Hunt with Your
Neighbor: CSE Demo Site
 Find
Paul Solman- Opportunity Cost in
Module 1. (Watch)
 Find Running Out of Agricultural Land in
Module 5. (Listen)
 Find Assignment Budget Basics in Module
12. (Assignment)
Part IV. Module 13
 Watch
 Slice
of Life
 Read

CSE pages 162-168 (Sections 4.4, 4.5, and
4.6)
 Watch

4 videos
Part IV. Module 14
 Watch
 Slice
of Life
 Read

CSE pages 168-178 (Sections 4.7, 4.8, and
4.9)
 Watch

3 videos
Part IV. Module 15
 Watch
 Slice
of Life
 Read

CSE pages 178-190 (Sections 4.10, 4.11, and
4.12)
 Watch

4 videos
Ten Controversies
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Kidneys
Cash for Clunkers
Oil Supplies
Price Gouging
Sweatshops
Gender Wage Gap
Eminent Domain
Needy or Greedy Seniors?
Spending, Taxes, and the Role of
Government
How Not to Help the Poor
Ask students to consider the
following as they watch each
video…
 What
is the controversy?
 What is the economic argument?

What element of economic thinking is
involved?
 What

is the non-economic argument?
What appeals are being made in the noneconomic argument?
Supplemental Modules
Economics Going Deeper
A. Supply, Demand, Dynamic Change, and
Price Controls
B. GDP, Inflation, and Unemployment
C. Fiscal and Monetary Policy
D. The Economics of the Great Depression ,
Great Recession, and Unemployment
Supplemental Modules
Economics and Values
E. Economics, Work, and Happiness
F. Economics, Markets, and Morality
G. The Economics of Poverty
H. The Economics of the Environment
Supplemental Modules
Personal Finance
I. Smart Choices for Earning More Income
J. Smart Choices for Saving and Investing
K. Smart Choices for Managing Credit
L. Smart Choices for Insurance
CSE Wrap Up and
Cooperative Relations
 Complete
workshop evaluation
 Learning Management Systems
 Instructor’s Manual
 Register for upcoming courses
How to stay connected
Join
the CSE Open Access Course
Email us- see brochure.
Email new videos, class activities, and
ideas to
CommonSenseEconomics@gmail.com
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Questions?