Integrating the Social Studies
Across Colorado History
The Economic Perspective
October 4, 2014
Marc Johnson
Education Program Director
Colorado Council for Economic Education
mjohnson@ccee.net 303-752-2323
Personal Financial Literacy:
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)
Standard 3: Economics
Grade Level Expectation – Grade 4 - Economics
1. People respond to positive and negative incentives
– Selected Evidence Outcomes
• Define positive & negative economic incentives
• Give examples of the kinds of goods and services
produced in Colorado’s different historical periods
and their connection to economic incentives
• Explain how the productive resources – natural,
human and capital – of CO have influenced the types
of goods produced and services provided
Standard 3: Economics
Grade Level Expectation Grade 4 PFL
2. The relationship between choice and opportunity
cost
– Selected Evidence Outcomes & 21st Century Skills:
• Define choice and opportunity cost
• Analyze different choices and their opportunity costs
• Give examples of the opportunity costs for individual
decisions
What different ways does an individual have to get
information when making a decision?
Presentation Objectives
• Concepts (technical vocabulary)
– 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 mention financial headlines:
The DOW was up 150 points today on news
that the US had attacked ISIS targets in
Syria.
The official pre-order opening date for the
new Apple iPhone 6 is October 10.
Economics is NOT
about money or
financial headlines.
No economist likes
those answers…
And the CO
Academic Standards
avoid those
perceptions too!
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
Shanahans +1
+
0
0
+
-
Shah
+ = 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
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
Would You Ride a Bull?
– For $5?
–
–
–
–
for $50?
for $500?
for $5,000?
for $50,000?
• Likely to get more risk
takers as the reward rises!
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?
Why might someone have wanted
to…
• …leave the comforts of St. Louis to
homestead in Colorado in 1866?
• Why might some rural counties be willing
to secede from the state of Colorado? What
would be the costs and benefits of
secession?
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 made Colorado Territory 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
Steven Levitt’s story in…
Think Like a Freak
His infant daughter & M & Ms
Unintended Consequences!
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
Productive Resources
Focus: Grades 3-5 Economics
Lesson 1
Rolling for Resources
CO Academic Standards
• Standard 3 – Economics
GLE (2nd grade) – The scarcity of resources
affects the choices of individuals and
communities
21st Cent. Skills
*Economic thinkers analyze how
goods and services are produced…
*Economic thinkers analyze the
scarcity of resources…
CO Academic Standards
• Standard 3 – Economics
GLE (4th grade) – People respond to
positive and negative incentives
Evidence Outcomes
*Explain how the productive resources –
natural, human and capital – of Colorado
have influenced the types of goods and
services provided
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
A Game: Rolling for Resources
RULES
Each group displays all its resource cards face-up.
Make certain the cards are scattered slightly so that each
resource card is visible.
To “win” the individual game, a student must be the
first to collect a human resource card, a natural
resource card and a capital resource card. To win the
group game, all members of the group must have all
cards; first group to finish wins.
A Game: Rolling for Resources
RULES
The resource cards have dots on the back that
match the dots for each type of resource on the
die (human resources – one dot; natural
resources – two dots; capital resources – three
dots).
Students will take turns rolling the die. Begin
with the youngest student in the group. After
that, play will move to the left.
A Game: Rolling for Resources
RULES
If the die lands on “natural resources,” the
student should find a natural resource card
from the resource cards.
If the die lands on “human resource,” the student
should find a human resource card from the
resource cards.
If the die lands on “capital resource,” the student
should find a capital resource card from the
resource cards.
A Game: Rolling for Resources
RULES
If a student selects the correct resource card,
the number on the back of the card will
match the number of dots for the type of
resource on the die.
If a student selects a correct resource card
from all the resource cards, he or she may
keep the card and his or her turn is over.
A Game: Rolling for Resources
RULES
If the card selected isn’t a correct example of the
resource displayed on the die, the student must put
the card back in the pile and wait for his or her next
turn.
If a student rolls the die and it lands on a resource for
which he or she already has a card, he or she may
roll a second time. If the die again lands on a type of
resource for which he or she already has a card, he
or she must wait until his or her next turn.
A Game: Rolling for Resources
RULES
The game is played until each student in the
group has correctly selected cards for each
type of resource.
When groups have finished…
Each group member gets a copy of Activity 1.3.
Identify the resource cards you selected during
the game by writing the resource name in the
correct space in Activity 1.3.
In the box next to each type of resource on
Activity 1.3, write a sentence containing the
name of this good or service and draw a
picture of the good or service.
Display completed 1.3 around the room.
Discussion
• Why do people use productive resources?
• Name one of the three kinds of productive
resources.
• What are natural resources?
• Give some examples of natural resources.
• What are human resources?
• Give some examples of human resources.
Discussion
• What are capital resources?
• Give some examples of capital resources.
• What are some human resources needed to
build a house?
• What are some capital resources needed to
build a house?
• What are some natural resources needed to
build a house?
Assessment
Activity 1.4
Questions using economic
thinking
What might inspire a student to complete
homework? (identify incentives!)
Why has there been so little teaching of
economics in elementary school until
recently? Why is it changing?
Identify some different reasons white settlers
from the east moved to Colorado? What
affected their decision-making?
Questions using economic
thinking
What productive resources did the Ancestral
Pueblans use to create Mesa Verde?
Cloud City p. 131 of The Colorado Story
Using your understanding of economic
benefits, cost & incentives, speculate on why
residents of Leadville would so destroy their
environment? Why would they restore it later?
Questions using economic
thinking
• Light rail – save energy; environmentally
friendly – how might you decide whether or
not to build more?
• What incentives, both positive and negative,
might the early fur traders have considered
before moving to CO?
What are some of the positive and negative
incentives for moving to CO today?
Questions using economic
thinking
• It’s sometimes said that the only people who
really made money during the gold and silver
rush were the general supply store and bar
owners? Why?
• What do you think are the greatest natural
resources CO has today? What were the most
valuable natural resources of the past? Why
has that changed?
Questions using economic
thinking
How has the nature of human capital of the late
19th century changed by the 21st century?
Explain why capital goods used in Colorado in
the 19th, 20th and 21st centuries changed so
dramatically.
Economists describe barbed wire as a capital
resource. Why?
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 souvenir.
Need
Parting Information
In your folder:
1) PPT
2) Economic Concepts
3) Rolling for Resources
4) Stock Market Experience
5) Online PFL class info
6) Mailing list (give to Marc if interested)