By Sarah Ostergaard
October is National Economic Education Month, which promotes the importance of teaching economics in schools. According to the Council on Economic Education, “Economic education gives you the tools to make informed decisions for yourself, your family, and your community. It is essential we give young people in particular the tools they need to succeed in post-graduation because they are the future.”
Twenty-five states, including South Carolina, require students to take a course in Economics to earn a high school diploma. Soon, according to Proviso 1.101 adopted by the General Assembly in the 2022-23 General Appropriations Bill, students will need to take a half credit course in Personal Finance to earn a high school diploma. The combination of Personal Finance and Economics for our high schoolers is fantastic. Both courses impart real-world, relevant, essential information that will serve our students well as they learn to navigate career interests and make decisions affecting their future.
The study of Economics in high school equips students to understand real word phenomena that directly affect their success, stability, and strategy. A high school economics course educates the next generation about important concepts like inflation (causes, effects, and mitigation strategies), our country’s economic goals (e.g., efficiency, full employment, growth, security, stability), monetary policy (dual mandate to limit inflation and foster full employment), economic systems (intricately connected to government structures), scarcity (the reason for choices), and international trade (e.g., supply chain, interdependence, diplomacy).
Moreover, an understanding of basic Economic principles serves students well in other areas, too. The study of Economics is summarized in six key principles:
● People choose;
● All choices involve costs;
● People respond to incentives;
● Economic systems influence individual choices and incentives;
● Voluntary trade creates benefits; and
● The consequences of choices lie in the future.
Thinking like an economist is good training in that it provides our young people with a foundation for an understanding of the world around them and a practical way to approach problem solving. Relying on the key economic principles can refocus difficult conversations and keep them on a productive track. Recognizing that all decisions involve choices and all choices have costs, what are the costs and benefits of each policy, approach, or choice? Shifting focus from emotions to a discussion centered on economic principles lessens the emotional toll of disagreement, helps keep the peace while engaging in productive dialogue, and moves discussion forward. Economic thinking promotes critical thinking in our classrooms.
What about Personal Finance? This will be a welcome addition to the education of our students, when taught before or alongside Economics as its foundation. In SC schools, Economics courses are part of the Social Studies department and the Personal Finance course is in CTE (Career, Technical Education). They overlap tremendously: making smart Personal Finance decisions depends on an understanding of Economics. Interest rates are not just numbers on a poster in a bank for CDs or loans — interest rates are affected by monetary policy set by the Federal Reserve Bank. Likewise, GDP and job growth are directly affected by the free market concepts of supply / demand and by fiscal policy put into place by government legislation; the wages earned by our students are a result of economic theories put into practice. Thus, the Personal Finance course requirement is a good start in implementing money management and is made whole and more thoroughly approachable with an Economics course as the understanding of how Personal Finance functions.
To that point, the SC Council on Economic Education, a.k.a. SC Economics, is a nonprofit organization offering professional development for teachers and contests for students in both Economics and Personal Finance. SC Economics is present throughout the state, implementing the SC Financial Literacy Master Teacher Program with the SC Treasurer’s Office, training teachers through webinars and in-person sessions, recognizing our state’s Young Entrepreneurs, and more. SC Economics expertly combines the teaching of Economics with Personal Finance. For more information, please visit www.sceconomics.org.
The post-pandemic world involves a new normal in many ways, including the economic perspective. We see firsthand that an understanding of economics concepts is useful. I applaud SC for taking a positive step in educating the next generation regarding Personal Finance, and let’s also make sure our future graduates are properly equipped by keeping Economics as a graduation requirement.
Happy #EconEdMonth, everyone. Let’s make smart choices.