Friday, January 25, 2008

Spending Limits - Trust in the Market

I saw this article (link no longer operative) in yesterday's issue of The Wall Street Journal and put it aside to blog on today. But I got beat to the punch by Sara Schaefer Munoz who writes The Juggle blog for the Journal. The topic is particularly relevant for those of us teaching personal finance/financial literacy courses. Because money is a key factor in marital discord, it makes sense to have a money plan. Unfortunately, too many new couples don't have such a plan.

The article brings up issues like separate checking accounts, as well as "when do you tell." It addresses the idea of trust (which is vital for making any system of exchange work), as well as money management (choices about scarce resources). Now before anyone goes 9-1-1 on my comment about trust and a system of exchange as it relates to marriage, I would point out that all relationships involve give-and-take (exchange) in order to survive. And one presumes we are in relationships because we want to be (voluntary). Therefore, relationships are another example of voluntary exchange. And as we know from our study of economics, when parties trade voluntarily, both parties are better off.

Now let's get back on task. I would encourage you to read the article as well as the post in "The Juggle," including the comments. I think it has some possibilities for classroom use. I look forward to your thoughts on the matter.

1 comment:

Meds said...

Day 1 of Econ/Finance class - People respond to incentives

Day 2 in Econ/Finance class - Voluntary exchange creates wealth

Day 3 to infinity in Econ/Finance class - Personal applications so you lead a financially responsible life

I think I will use this article in AP Econ next week. I particularly enjoyed the $500 for her/$1000 for him plan. Trade does not have to be 50/50 or 1 for 1 for it to benefit both parties!