I keep a personal journal of things I read. In it I place excerpts that resonate with me. They can be pithy, insightful, or just interesting. But they must make me think.
Last night, I was trying to update my journal entries. I had fallen behind with the move this past summer. And I was revisiting Diane Coyle's The Soulful Science: What Economists Really Do and Why It Matters.
At one point in Coyle's book, she uses a famous quote from Charles Dickens' classic work, David Copperfield. In it, Mr. Micawber notes the difference (in his view) between happiness and misery.
"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
As I read that quote, I was struck by the fact that the difference between budget that allows us to save and a budget that drives us into debt is often small. It may be the result of a few choices or decisions. This is one reason why budgeting is an important part of financial literacy, and why the economic concepts of choice and opportunity cost are important underpinnings of that process.
As I've often stated, economic and financial literacy are two sides of the same coin. To do well by our students, we need to teach both the theory and the application. But it's fun when you can point the idea out in classic literature.
I look forward to your comments.
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4 comments:
Within the first weeks of my new economics class I asked the students to keep track of their spending, including all the coins they put in machines for beverages.
It is always interesting. The students were surprised at the money they spend and where it goes. One said the opportunity cost of $11 worth of candy was 3 gallons of gas. Few if any were willing to share their spending report with their parents. After they recorded their spending I asked them to create categories of spending and put in a pie graph. Only one pie graph included a category of "saving". The excercise generated good discussion and awareness leading into a disccussion of "paying yourself first." You might be interested to know they all spend an significant percent on FOOD!
It's an interesting quote by Dickens. It's also interesting to see how personal borrowing has become much more acceptable in the past two decades. I think there is a lot to be said for more financial education
I think that you have a very interesting point of view of Charles Dickens' analysis of a budget. I like the quote that you used from Dickens' work.
I also liked how you related economics to something from a piece of literature. Just today, in my economics class, we watched a part of "Mary Poppins" that related to economics. Relating economics to something students can relate to gives them a better understanding of what's going on in the world of economics, instead of throwing a bunch of words at them.
I agree with you on the point that the difference between a budget that is flourishing and one that is not can be very small. This is shown exquisitely by Mr. Micawber's quote. It tells us the importance of saving money for the future. However, on the flip side, since 70% of our GDP comes from consumption, this may not be good. If people start to save a lot and not spend a lot, our GDP decreases and the economy pays a price for this. I think that this shows that many people are getting smarter on how to budget their money and they tend to save most of it as much of the news tells us. This is not very good for our economy and we may see a tax cut in the near future to encourage spending. This in turn would help our economy get out of the tough spot it is in right now. Budgeting is very important and definitely teaches one about opportunity cost and other economic concepts. However, I think that a tax cut is necessary to induce spending to help the economy. Yes, it is wonderful when you can find economy related subject matter from movies (Mary Poppins) to literature (David Copperfield).
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