BELL RINGER
• In your JOURNALS, define the word
“INCENTIVES.” Remember to draw your
“frame of reference.”
SSEPF1a
• SSEPF1 The student will apply rational
decision making to personal spending and
saving choices.
• a. Explain that people respond to positive
and negative incentives in predictable
ways.
Economic Decision Making
Unit 1 Lesson 2 (ECON-U1-L2):
Incentives and Rational Decisions
GROUP ACTIVITY
• Get into groups of 3-4. Please note that
next week groups will be assigned, not
chosen.
WHO WANTS A BLOW POP?
• How many of you
would like this item
today?
• One student in each
group will leave today
with a blow pop in
hand.
SCARCITY
• The blow pops in my possession are scarce
because they are both limited and desired by the
students in this class.
• Both individuals and societies must devise
ways to deal with this problem of scarcity.
• This is exactly what you will be doing in today’s
lesson.
• I have only a limited number of each item to
allocate today; there are no more.
HOW DO I DECIDE?
• How will I determine who among you will
receive a blow pop?
• In your groups, generate a list of all the
different ways you can think of for me to
determine who gets the item in your group.
• You have 5 minutes….
WAYS TO DECIDE…
•
•
•
•
•
•
•
•
•
•
Most push ups
Lightest phone
Highest GPA
Youngest
Oldest
Rock paper scissors
Fired!
Longest hair
First in class
Most socks
•
•
•
•
•
•
•
•
•
•
Best cook
Jump farthest
Talks most
Longest nails
ABC’s backward
Best job
Shoots best
Band
Laughs most
Most fb friends
WAYS TO DECIDE…
•
•
•
•
•
•
•
•
•
•
Rock paper scissors
most talented
Youngest
Pick a card
Sky blue
Biggest shoe
Fastest
Draw straws
Most athletic
funniest
•
•
•
•
•
•
•
•
•
•
Eeny meeny miny moe
Ugliest
Braces
Smallest foot
Most skilled
Good at board games
Best grades
Best baby stuff
Lolli law
Best personality
OPPORTUNITY COST
• Economics stresses the importance of people
making decisions in a careful way.
• This allows people to know what they are giving
up when they choose among alternatives.
• The best alternative that you give up when you
make a decision is called the opportunity cost.
• Economics can provide a great way to help your
group decide how to allocate your good.
THE PACED DECISION-MAKING
MODEL
• Now that the class has helped me create a
list of possible allocation methods, you will
use the PACED model to determine who
will really get the blow pop good in your
group.
P.A.C.E.D.
•
P. What is the PROBLEM?
• What decision are your trying to make?
• What is the issue at hand?
•
A. What are the ALTERNATIVES?
• What actions are you considering?
• What options are available to you in this decision?
•
C. What are the CRITERIA important to the decision?
• What characteristics are you looking for in your result?
• Which criteria are more important than others? How do you rank them?
•
E. EVALUATE each alternative.
• Evaluate each alternative on the basis of each criterion.
• Give each alternative a plus (+) or a minus (-) according to how well it meets each
criterion.
•
D. Make a DECISION.
• Calculate the net value of each alternative; which alternative best meets your highestranking criteria?
• What do you gain with each alternative?
• What do you give up with each alternative?
So…
• What is the problem…
– Deciding who will get the good in each group.
• What are the alternates…
– Everything the class suggested that we listed
on the board.
PACED DECISION-MAKING GRID
• To streamline the PACED process, each
group should select the five alternatives
from the class list that they believe to be
the best.
• You should list these five alternatives in
the space provided on your handout.
Priorities…
• What criteria are important to you in making this
decision?
• Which four criteria do you deem most important?
• List these criteria at the top of your decisionmaking grids.
• How should these criteria be ranked?
• Rank order the criteria on your grids by giving a
score of 1 to your top criterion, 2 to your next
most important and so on.
EVALUATE THE ALTERNATIVES
• Now, tell me how you should evaluate the
alternatives.
• If your group decides that an alternative
successfully meets a criterion, you should put a
plus (+) in the appropriate square on your grid.
• If you feel an alternative does not meet a certain
criterion you should put a minus (-) in that box.
• Evaluate each of your five alternatives on the
basis of each of your four criteria.
DECISION TIME!
• Calculate the net value (number of pluses less
number of minuses) of each alternative on your
grid.
• Then allocate the item to the person you chose
through your decision-making process.
• Explain who got the good and how the decision
was made. What criteria was most important to
you in making your final decision?
ECONOMIC SYSTEMS
ACTIVTY…
• There are different ways of classifying economic
activities.
• Each type of economic system represents a
different set of rules for economic behavior.
• Knowing the different classifications will help you
recognize differing forms of economic activity.
• Societies often have similar decisions to make
regarding goods and services such as health
care, environmental activity, education and
housing.
ECONOMIC SYSTEMS
• Traditional Economies
• Market Economies
• Command Economies
TRADITIONAL ECONOMIES
• Decisions about what to produce, how to
produce and to whom goods and services
will be allocated generally repeat decisions
made in earlier times or by previous
generations.
• Continuity and stability are valued in
economic life.
MARKET ECONOMIES
• Individuals and businesses own productive
resources and make the decisions about what to
produce, how to produce and to whom goods
and services will be allocated.
• The market prices that result from individual and
business decisions act as signals to producers,
telling them what buyers want.
• Goods and services are allocated on the basis of
prices.
COMMAND ECONOMIES
• An authority such as a feudal lord, a
government agency or central planners
decide what to produce, how to produce
and to whom goods and services will be
allocated.
WHERE DO YOU FALL?
• Categorize the group-allocation decisions
you made by the type of system your
process most closely resembles.
CLOSURE
• The PACED model is a very useful tool that you can use
to make decisions about important issues affecting
society and about personal problems that affect your
own life.
• Personal problems include what to do with spare time on
the weekend, which movie to see, which part-time job to
take or where to go to dinner before the prom.
• Social problems include issues such as which
immigration policy a nation should adopt, whether a city
should raise its property taxes, whether a school district
should build a new high school or what the legal
minimum drinking age should be.
EXIT TICKET
• As a class, lets select a current economic
issue of interest to us.
• Groups should use the PACED model to
make a decision about the issue.
• Compare and discuss your group’s results
to that of the others and review the steps
of the economic decision making process.
EXIT TICKET/ESSENTIAL Q.
• ANSWER THE FOLLOWING IN YOUR
JOURNALS OR ON A SEPARATE
SHEET OF PAPER (remember get
Journals for Monday!)
• WHAT ARE INCENTIVES? HOW DO
PEOPLE RESPOND PREDICTABLY TO
NEGATIVE AND POSITIVE
INCENTIVES?