Integrating the Social Studies
Across Colorado History
Elementary Economics
January 23, 2016
Marc Johnson
Education Program Director
Colorado Council for Economic Education
mjohnson@ccee.net 303-752-2323
Not one more thing!
Not only are you supposed to
teach PFL & Economics…
It can be enjoyable and rewarding!
As best I can, I’ll use the KISS approach…
Economics
• Content Area: Social Studies (4 standards)
– History, Geography, Economics, Civics
– For each grade level, P-8:
– One GLE in Economics
– One GLE in Personal Financial Literacy
(PFL)
Economics & PFL integrate well
Presentation Objectives for Economics
• Concepts (technical vocabulary)
– Wants / Needs
– The economic trilogy
• scarcity, choice & cost
– Incentives
• positive
• negative
– Goods & services
– Productive resources
• natural, human, capital, entrepreneurship
Concepts are universal
Across space…
…to the world, Mexico, Colorado,
Denver or your classroom!
Across time…
…to the present, past or future!
Let’s Get Started!
When I ask ANY group what economics
is all about they invariably say…
MONEY
When I ask ANY group what economics
is all about they invariably say…
OR, they cite economic statistics:
CO is the 2nd largest aerospace employer in
the US, behind CA.
Median per capita income in CO in 2013 was
$58,823 (US figure: $52,250).
Colorado’s unemployment rate in December,
2014 was 4%.
Economics is NOT
about money or
data.
No economist likes those
answers…
Let’s start with some
fundamental assumptions
of the academic discipline
of economics…
Wants & Needs
CO Academic Standards make this distinction:
“Identify the difference between personal wants
and needs.”
“Give examples of the difference between
something you want versus something you need.”
An economist’s
reaction
And here’s why…
What do you need to survive – the minimum?
We’re talking mere existence and basic survival.
In the context of life in the 21st century in an
affluent society – what do you need to survive?
The distinctions between needs and wants
become blurred.
So, economists simply use one category –
Wants – and make distinctions about how much
we want something…
and posit that our wants are unlimited.
And that…creates a problem…
A Gift from CCEE
• Who would like this
ultimate economics &
PFL resource?
• Wants: ______
• Available: 1
THE
economic
problem?
Scarcity
Scarcity
• Wants > Availability
– or,
• Unlimited wants > Limited resources
Scarcity  Choice
Economics is:
– the study of
choice
The Economic Way of Thinking:
Key Concept
• Scarcity necessitates choice
–people must choose
Scarcity  Choice  Trade-offs
A World of Choice
Grand
Slam?
Marry the
little redhaired girl?
Daily, Small Choices
Maybe go
shopping
at the mall?
Should I
go to the
library
today?
Should I
go hiking
today?
Big, Strategic Decisions
Should I
go to
college?
Should I
work
instead of
college?
We All Confront Choice
A school
teacher?
A business
person?
Develop a
Decision-Making Framework
for Students
• Help make decisions
– by learning a process for
more careful choice
Decision-Making Model
• Define the Problem
– outcome to be achieved
• List the Alternatives
– ways to achieve the outcome
• State the Criteria
– standards to judge alternatives
• Evaluate the Alternatives
– apply criteria to each alternative
• Make a Decision
– select best alternative
PACED Decision-Making Model
• Define the Problem
• List the Alternatives
• State the Criteria
• Evaluate the Alternatives
• Make a Decision
PACED Example
• My wife and I decide on
restaurant for dinner …
Where to Go for Dinner?
How about
Shanahan’s
restaurant?
How about
Venice
restaurant?
Problem: What Restaurant for Dinner?
Criteria
Alternatives Food
quality
Menu
choice
Drive
Time
Quiet
Cost
Ajuaa’s
0
0
-
+
-
+
Venice
+2
+
+
-
+
0
+1
+
0
0
+
-
Shah
Shanahans
+ = above average
- = below average
0 = average
Problem: Choose a Car to Purchase
Criteria
Alternatives
• What factors are important to
you in making this decision?
 Used to rank one alterative
as “better” than another.
Greatest value is not in the specific answer, but
in the process of identifying important factors.
Candy Bar Activity
• One Volunteer, please?
• Opportunity lost  opportunity cost
– Value of the best foregone alternative
– “Choosing is refusing”
– choose A, refuse B –
» cost of A is value of B
The Dismal Science!
There’s no such thing as a free lunch!
TNSTAAFL
The Economic Way of Thinking:
Key Concept
• Choice involves cost
» opportunity cost
Sample question from Grade 4
CMAS Social Studies Practice Test
Type your response in the box.
Read the paragraph. What should the student do?
Explain what her opportunity cost will be and why.
A student is trying to decide whether to go roller
skating, practice soccer, or read a book today. She
has time to do only one activity. She went roller
skating yesterday, she has an important soccer
game tomorrow, and the book is a new one by her
favorite author.
Opportunity Cost Examples
• Cost of coming to this workshop today?
– Value of next best foregone alternative
• joy spending day with family or friends
• Cost of using frequent flyer miles to fly to Las Vegas?
– Value of using frequent flyer miles to fly to Miami
• A student’s cost of going to a movie with friends?
– $8.00 movie ticket price
– $2.00 transport (gas, etc.)
– $20.00 babysitting earnings given up
Explicit
Implicit
Since Scarcity Requires Choice
• … and since choice involves cost
Why choose it?
• Assume that:
– People choose X if:
• B(X) > C(X);
– otherwise, not
B(X)
C(X)
where :
B(X) ≡ benefit of choice X
C(X) ≡ cost of choice X
Play It Again,
Sam
• Raise the cost
– if C(X) > B(X),
• choose another bar
The Economic Way of Thinking:
Key Concept
 People respond to incentives
Are You Willing…
• … to be a police person?
– For:
•
•
•
•
•
•
$20,000 per year?
$40,000 per year?
$60,000 per year?
$80,000 per year?
$160,000 per year?
$320,000 per year?
Practice – Identify Incentives
1. Why do some students want good grades?
2. What makes you want to be a good teacher?
3. What makes a company want to build a ski
resort?
4. What inspired people in Colorado Territory to
want to become a state?
Intended Consequences
• If people respond to incentives . . .
– then behavior can be altered in
desired or intended ways
– For example …
The Camel Race
 Two Bedouins met in the desert, and fell into an
argument over their camels, each claiming that his was
the slowest, “stubbornest,” most useless camel in all of
Arabia.
 The argument ended in a bet. They agreed to race to the
oasis, two miles away, whichever camel arrived last
would be proved slowest, and his owner would win ten
dirham from the other.
Camel Race
continued
 . . . They got on their camels,
and set off slowly toward the
oasis. More slowly, still more
slowly. After a while, it
became clear that since each
Bedouin was trying to win the
bet, they were never going to
make it to the oasis.
 . . . After a while, a wise
sheik rode up on a donkey
and asked them why they
and their camels were
standing still, in the middle of
the desert, on a hot day, with
the oasis less than two miles
away.
The Treasury,
Petra, Jordan
The Camel Race
continued
 They got off their camels, and
all three sat down in the shade
of a rock while the two
Bedouins explained about their
bet.
 The wise sheik whispered two
words to them. The Bedouins
immediately jumped on the
camels and rode off as fast as
they could towards the oasis.
 What were the 2 words?
________
_________
Switch
camels!
Consequences
 People respond to incentives causing
 intended consequences, and
 unintended consequences
 which can offset the intended benefits
The Tax Man Cometh
• April 15, 1987 . . .
– IRS rule change:
• Instead of merely listing each dependent child, tax
filers required to provide Social Security number.
Result?
7 million children
disappeared
Key Concept, Once Again
 People respond to incentives
 …and the rest is commentary
 Armchair Economist
• Stephen Landsberg
 Freakonomics & Super Freakonomics
• Steven Levitt
Goods and Services
Goods
Things that can satisfy people’s wants.
A car
A house
A dish of ice cream
An i-pod
Other goods…
Goods and Services
Services
Activities that can satisfy people’s wants.
Dentistry (a dentist checking your teeth)
Selling you a car (car sales person)
Babysitting (babysitter)
Playing professional football (professional
athlete)
Other services…
Where do goods and services come
from?
Think of a good…like
a house. What do
you need to produce
or build a house?
Lumber
Nails
Saws
Carpenters
Roofers
Economists call all of
these “resources”.
There are three kinds of
resources.
Human Resources
Human resources are people who work to
produce a good or service.
Examples:
Truck driver
Plumber
Teacher
Nurse
Can you name others?
Natural Resources
Natural resources are things that occur naturally in the
world and can be used to produce a good or service.
Examples:
granite
natural gas
deer
water
gold
Can you think of others?
Capital Resources
Capital resources are goods produced and used to
make other goods and services.
Examples:
an office building
a copy machine
pots & pans
a tractor
a projector in school
Can you name any more?
Human, Natural & Capital
Resources
Practice...
What productive resources are necessary to produce a
haircut?
Comb, brush, razor, clippers, electricity, scissors
Hair stylist, receptionist
Water
Productive Resources
Focus: Grades 3-5 Economics
Lesson 1
Rolling for Resources
Slides are hidden here but are available in the
PPT you have access to in the class WIKI.
Did we achieve our objectives?
• Concepts (technical vocabulary)
• Wants / needs
• The economic trilogy
scarcity, choice & cost
• Incentives
positive / negative
• Goods & Services
• Productive resources
natural, human, capital, entrepreneurship
For Whom?
Rationing Device
•
•
•
•
•
•
•
Two Primary
Lottery
Mechanisms Observed in
First come
World?
Market/Price
Market Economy or
Command/Planner Command Economy?
Force
Share
Let’s vote on the one we want
to use for the gift from CCEE.
Need