Going 50/50

A couple days ago, The Wall Street Journal had this very interesting article in the regular column about student financial literacy in the personal finance section. It's about dealing with the "I wants" that accompany growing up. The idea is simple. If the youngster claims to want a specific item, particularly a pricey one, offer going half-and-half with them. They can use their allowance, birthday money from relatives, or money from their "jobs" for their portion. The lesson for the children is a good one. I have used this strategy a number of times, and it really does help my children prioritize those wants. It's amazing how something they absolutely "must have" can fade when it involves their own funds. And when they do purchase something that way, they frequently take better care of the item than they do with other things they received as gifts.

It actually reminds me of an old "Curtis" comic strip. In it, Curtis asks his mother if he can go see a film ("Gut-Eaters from Mars" comes to mind, but the title is not material). His mother suggests he use his allowance. His response? "But that's my money." Anyone else care to share their experiences?

Econ in Music for Early Elementary

Here are three songs for young children that can be used to introduce economic ideas. And all can be downloaded for under a dollar.

The first is Iko, Iko by Parachute Express. You may also know it as the "Jambalaya" song. The song is about making jambalaya. Students should be able to identify human resources, natural resources and capital resources in this song.

The second is When I Build My House, also by Parachute Express. The lyrics talk about a number of tasks involved in building a house (hammering nails, laying bricks, painting the walls). The refrain is "When I build my house there's so much to do. It's fun when you come along and help me too." The concepts that can be integrated with this song are division of labor (splitting up the work) and specialization (the person who is best at each task).

The final song is Sittin' Down to Eat by Bill Harley. It's a fun song about a meal interrupted by all kinds of large animals. Each is invited to join the meal. But when a caterpillar finally joins, the house explodes. It offers an insight into the concept of marginal cost/benefit. One by one, the house gets crowded until the addition of one more imposes a significant cost.

I hope these are useful for you. I welcome comments.

A Resource for the Lower Grades

I suspect a lot of the elementary teachers use The Courage of Sarah Noble. The book was written in 1954, and as such, has certain phrases and terminology that might be different from what's used today (“indians” instead of “Native Americans”, etc.). But it's still a good story for the early elementary grades, especially for those students starting the transition to chapter books.

There are a number of opportunities to discuss some very basic concepts, like scarcity, choice and available resources. There are some important decisions made in the story, as well, so there is an opening to discuss the choices made and identify the "opportunity cost" as well as the costs and benefits behind each option.

If you're looking for a resource that can help introduce this part of our nation's history, and still give you some spots to slip in some economic concepts, this classic piece of children’s literature may be worth looking into, or if you're already using it, give it another look to try some new things.



I look forward to comments.

A Couple of Interesting Resources via Chicago

The first is not actually via Chicago, it's via The Council on Foreign Relations in New York. But the content is strictly from Chicago.

The CFR recently hosted the President of the Federal Reserve Bank of Chicago, Charlie Evans. I know Charlie from my days in Chicago, and I have immense respect for him. Naturally, I was excited to learn that he had given a speech at the CFR. I was more excited to learn that it's available as audio and video and transcript here.

Charlie's talk was titled "The Great Inflation Debate" and he thoroughly discussed the back and forth about the Fed's actions in the recent recession and whether those actions might lead to inflationary pressures. As always, Charlie was very thorough, and very thoughtful. His comments make excellent follow-up to the Krugman article highlighted in previous posts. At the very least, I would use this presentation with any students involved in any kind of policy competition (such as the Fed Challenge) or project. It provides a number of perspectives, and his answers to a wide range of questions provide further insight into current conditions.

The second resource is courtesy of the Center for International Studies at the University of Chicago. This past summer, the Center hosted a teacher institute, "Understanding the Global Economy: Bringing the World Market to Your Classroom." About six weeks ago, they had all the readings and PowerPoint presentations from the institute on their website. (Click on the "Resources" tab on the home page.)

I had a chance to look at most of them, and they were quite good. Mind you, I didn't agree with all of them. But the presentations balanced each other out quite well, in my opinion. (There were one or two that were more normative than positive, but we can leave that.) Since then, CIS has added videos of the presentations and some lesson plans.

The lesson plans are good, although they are old stand-bys that have been updated, for the most part. Nevertheless, they work. It is also important to note that there are lessons for all grade levels, which is not always the case with this topic. The videos are good quality, so they should be of help. I'm not sure I'll have the time to go through them all, but there are two or three that I will make a point to look at, because I've already borrowed from the assigned readings for those sessions.

I know you're all busy, but I hope you get a chance to look at these, and I hope you'll share your thoughts.

A Resource for Early Elementary

Earlier this year, I was involved in a reading program at the school where the Powell Center for Economic Literacy is located. I was reading stories to kindergarten students to introduce them to economic concepts.

That may sound like a tall order. But the book Apple Farmer Annie (see link in carousel at left) made it easy. And as school will soon start, and in many parts of the country early elementary students will be visiting nearby orchards, this is a good time to tell you about the book and offer some ideas for using it.

The book is simple enough. Annie is an apple farmer. The story tells about the things Annie does to raise and market her apples, including making cider, applesauce and apple pies.

The link to economics was easy. Before reading the story to the students, I first asked them about visiting an apple orchard. The students had visited an orchard the previous September, and all were able to recall many details of their trip.

As I read the story, I asked the students point to items in the book that they might have seen on their visit to the orchard. As Annie made applesauce, apple cider and apple pies in her kitchen, I asked them about making or having those products at home.

The illustrations were helpful. As I talked with the students, I also introduced the ideas of human resources, natural resources, and capital resources - all of which are used in production. I would have students identify the human resources they saw (Annie), the natural resources they saw (apples, bees, trees), and capital resources (the tools on Annie's farm and in Annie's kitchen).

I chose not to introduce entrepreneurship in this exercise. It’s a harder concept for kindergarten students to grasp, and since Annie was both the human resource and the entrepreneur, I didn’t want to confuse them. Also, as I defined natural resources as products from nature used to make other things, I accepted answers of butter, flour and sugar as natural resources if the students could tell me why they were from nature.

If you teach early elementary and one of your activities is visiting a nearby orchard or farm (doesn't have to be restricted to apples), this might give you an introductory exercise or a capstone activity after the visit.

***UPDATE***
You can find a lesson plan to use with this book at the website of the Powell Center for Economic Literacy.

Please share your comments.

A Lesson Plan for Elementary - Sweet Potato Pie

This post relates to the following Keystone Economic Principles:
6. Do what you do best, trade for the rest.
and
8. Quantity and quality of available resources impact living standards.

I reviewed the book Sweet Potato Pie just a few days ago. Now the Powell Center has an online lesson plan to accompany the book. Enjoy, and please share any comments about the lesson.

Books on Economics for Elementary School

This post relates to the following Keystone Economic Principles:

6. Do what you do best, and trade for the rest.
and
8. Quantity and quality of available resources impact living standards.

When school resumes next week, the Powell Center will begin one of its traditional activities at Collegiate School. Every spring, the Powell staff goes to the elementary school and does a "story time" session with the students to help them see economics through literature. One of the books we'll be using this year is Sweet Potato Pie by Kathleen D. Lindsey.

If you're unfamiliar with the book, it's about a family that faces a financial crisis. Their solution is to bake and sell sweet potato pies. I don't want to go into more detail than that, and I'm certainly not doing the book justice as a result. But the book provides a great way to examine how people (in this case a family) respond to incentives (in this case a negative incentive). But it is even better at providing a platform to discuss the production process and the factors of production: human resources, capital resources, natural resources and entrepreneurship.

We will be posting a formal lesson plan, with an accompanying presentation for classroom use sometime next week. I will post again when it is ready. But in the interim, check out the book and give it some thought. I think you'll find it a worthwhile resource for teaching some economics in the lower grades.

I look forward to your comments and suggestions.

Books for Economics in the Elementary Grades: How to Eat Fried Worms

This entry makes reference to the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
5. Incentives produce predictable responses.
and
8. Quantity and quality of available resources affect living standards.

Another one of the elementary level books I've been reading is How to Eat Fried Worms by Thomas Rockwell. The title is gross enough to engage many upper elementary students, but the story is full of potential economic lessons.

It revolves around two boys who make a bet for $50. The bet is whether one of them, after boasting about how he can eat anything, can actually eat a worm a day for 15 days. They agree on some ground rules and the challenge is on. After choosing to go through with the bet, both have second thoughts at differing points, after they begin to face the consequences or possible consequences of their decision. But the incentive of $50 acts as a spur to both of them as they each try to win the bet.

One of the more intriguing ties to economic thinking comes from one of the ground rules. The
boy who has to eat the worm may do so any way he wants. By adding resources of various quantities and qualities: varying from condiments to a mother willing to stretch her culinary skills, we see how these resources improve the boy's "standard of living."

The book is fun and students will enjoy the various predicaments. And I will not give in to the temptation to refer to Keystone Economic Principle #2: There ain't no such thing as a free lunch.

I would appreciate any thoughts you might have on the book.

Books for Economics in the Elementary Grades: The Homework Machine

This entry refers to the following Keystone Economic Principles:

1. We all make choices.

3. All choices have consequences

5. Incentives produce “predictable” responses.
and
8. Quantity and quality of available resources impact living standards.

Recently, I've been reading some books for younger readers. It's been part of a program with the lower School here at Collegiate. They have a lunch-time enrichment program called Chat-and-Chew. Students select from a list of books, and then have a book club meeting over lunch. The program directors asked the Powell Center to provide some insights and questions for discussion that are grounded in economic concepts. Consequently, I've been reading selected titles for the lower grades, and I have some titles to recommend for anyone looking for book ideas. I'll be posting on them over the next few days.

The first book is The Homework Machine by Dan Gutman. The book focuses on the activities of four fifth-graders - thrown together as a group by their teacher. While it initially looks like they will not have much in common, they eventually find a basis for friendship - a common aversion to doing homework.

The reader finds out that the smartest one in the group has developed a homework machine - a computer that can optically read questions or problems, and then seeks the answer on the internet. He lets this information slip out to his teammates, and soon they convince him to demonstrate and share the technology.

The book offers opportunities to discuss the choices they make (to use or not use the machine) and the incentives to use it; the consequences of the choice (fear of being discovered, and formation of "couples"); and even how the available resource (the machine) impacts the living standards of the students.

It's an enjoyable book, and I would recommend it as a way to bring these economic ideas into your class, whether the book is a read-aloud or a class assignment.

If you're familiar with this book, please share your thoughts and experiences.

Books for Economics in the Elementary Grades: The Tale of Despereaux

Those of you with children in upper elementary school and those of you who teach at that level are probably aware of the Newberry Award winning book, The Tale of Despereaux, by Kate DiCamillo. My hunch is you are probably also aware that the book has been made into a movie and that The Tale of Despereaux movie will premier later this month.

While I have no privileged information regarding the film, I can now report that there are now three lessons tied to the book on the web site of the Powell Center for Economic Literacy. The three lessons examine the concepts of choices, Institutions, and Wants & Resources in the book, and can be used to help students gain a different and valuable appreciation for the book, as well as how the basic idea of economics - decision-making - is all around us; and how we use the various resources at our disposal to satisfy wants of all kinds.

I hope you'll look at these lessons, and please share your thoughts and experiences with us.

Tragedy of the Commons

This summer, the Powell Center for Economic Literacy, along with the Longwood University Center for Economic Education and other organizations, hosted a teacher workshop on "Saving Our Rivers and Bays". One of the materials used and distributed to the teachers was the book Common Ground. The book stresses the importance of wise use of our natural resources. The first few pages introduce the tragedy of the commons - the idea that land held in common and used by everyone, frequently is not used well as there is little individual incentive to protect it while there is a large incentive to use/abuse it. The book is clearly aimed at the middle elementary grades with its relatively sparse language and lush illustrations. It tells a powerful story, although I thought at the time, it needed something more.

Recently, there have been a couple of good articles that I will recommend for educators. They provide that something more. The articles describe the limits to the concept, as well as a tendency to overstate possible benefits of private property vs. common property.

The first article was in last week's issue of The Economist. It does a good job of explaining how common goods share certain characteristics with both public goods and private goods. Because of this, one cannot and probably should not, attempt to manage common goods the same way as one would manage either public or private goods. Indeed, not all common goods are managable using the same methods. One problem is properly defining and identifying common goods. But once that's done, there are innovative ways to manage the goods, as is demonstrated in the article.

The second article comes courtesy of The New Yorker (HT to Arts & Letters Daily). In the article, titled the "Permission Problem", the problem of cooperation for a common goal when all property is held or protected as private is addressed. One of the key points refers to research which demonstrated revealed one party in a multi-party project may hold their resource back, asking a price for use that makes the whole project unfeasible. I did find myself wondering how the problem was framed, as I suspect that behavior is more likely when the party knows their resource is key or unique to the success of the whole. I suspect that, if framed in a general context, marginal thinking may enter in more frequently, i.e. am I receiving more for the resource in this use than I am in its current use or non-use? But I am not familiar with the research. Regardless, article suggests that mechanisms for coordination can overcome the problem. Sometimes the mechanisms are government instituted, and some are voluntary within the marketplace.

Finally, for those of you interested in a high school level classroom exercise on the tragedy of the common, I would suggest this activity. It should provide some substance for discussion, and could lead into a dialogue on how abuse of a common resource can be limited, providing opportunity for you to integrate ideas from the articles.

I look forward to your comments.

Beatrice's Goat

I'm sure all of you who teach at the elementary level are familiar at some level with the story behind Beatrice's Goat. It's the true story about a young girl in Uganda whose family receives the gift of a goat, and how it changes her life. The goat provides a resource for the family to produce milk for its own consumption and for sale to others. This, in turn, provides capital to improve the family's home.

I'm also sure those of you familiar with the story were aware when Beatrice was able to go to college in 2005, and I hope you saw this story about her graduation. I trust you will share this story with your elementary students.

But I think this also has a lesson for those of you teaching at the high school level. Many of your students were first introduced to Beatrice in their early academic career. But I also suspect many of them lost track of her. You and they would be well served by a reintroduction. There is much to be learned about the value of capital to change one's life; and the importance of reinvesting in one's human capital. I'm sure Beatrice's life was changed by the goat. I suspect she will change the lives of many, many more people.

I look forward to your comments.

Local Produce / Global Trade

An interesting topic to discuss with your students has to do with something they're usually interested in - food.

A trend that has recently gained notice, despite having been around a while, is the move to increase reliance on locally grown food. In the past, the case made for the practice has largely focused on support of local farmers, the sense of knowing more about what you're eating, as well as nutritional value because the local produce is frequently also organically grown.

A more recent argument in favor of the practice relates to the transportation cost for the food we eat. If we buy local, the reasoning goes, it takes less fuel to transport the food from grower to market. This reduces energy costs and carbon footprint.

Now, I've seen other discussions that indicate the cost of transportation per unit of food (per pound, per ton, or whatever) is actually less because of the huge amounts moved and the types of transportation (not every product is transported every mile by truck), but articles have tended to be one side or the other.

This article from The Carnegie Council is one of the better ones I've run across. The article balances local issues against global issues and speaks about the opportunity cost of our choices. In fact, it is the framing of the choices that makes the article so interesting and compelling for me. It frames the choices this way:

1) Think globally, buy locally.
2) Buy local when you can, import when you must
3) Buy local if you can afford to, let others buy imported food
4) Buy what you want

There are, of course, other choices (although #4 includes every option, as far as I can tell). But the choices speak to the idea that each of us needs to be free to pursue our own priorities when making our choices. But as long as we're aware of the impact of our choices, both locally and globally, we can better recognize the opportunity cost. And that makes for more informed decisions.

I think you could engage students down to the upper elementary grades in this discussion, focusing on choices, opportunity cost, and interdependence. If you did this at the middle and high school level, you could focus on interdependence, trade, economic development and world poverty. Regardless, when you put the topics into a food context, you can get attention.

I look forward to your comments.

Book for Economics in the Elementary Grades

As part of a new and ongoing series, I want to introduce A Basket of Bangles: How a Business Begins, written by Ginger Howard and illustrated by Cheryl Kirk Noll. If you're unfamiliar with the story, it is about a woman in Bangladesh who becomes an entrepreneur as an alternative to begging. The story is really about the micro-lending phenomenon - the idea of providing micro-capital (small loans) to allow people in less developed nations to become entrepreneurs.

In the case illustrated in the book, the lead character, Sufiya, must find four other women to form a business - essentially a partnership. All five of the women are given a small loan (equivalent to about $35). This is enough capital for each of them to begin a business. Sufiya sells bangles. Her partners alternatively sell milk, after school snacks, soap and saris. They are bound together through the lending process, looking out for one another and celebrating their success. While the interest rate they pay (20%) may seem excessive to us, they manage to pay the interest on time, as well as save. The story ends with them using their established good credit to take out another loan to expand their respective lines of business.

The book can be used as an introduction to a classroom business, or just to understand the basics of borrowing, lending, and business formation. In the book, the students can identify capital resources, human resources, natural resources and entrepreneurship. This book is great for an introduction to world of business on a global scale, as well as a chance to see a real world success story - these micro-lending banks are having a strong positive effect in many parts of the world. (Muhammad Yunus won the 2006 Nobel Peace Prize for his work in developing micro-lending in his home country, Bangladesh. View this video for more information.)

I look forward to your comments.

Book for Economics in the Early Elementary Grades

I usually don't have much here that can be directed specifically to elementary grades. I'm going to try to do more, but I can't promise when or how much.

But here's a book that early elementary teachers can use to cover a variety of economic and financial literacy concepts. Itsy Bitsy the Smart Spider is a takeoff on the old children's song about a spider, a rainspout and inclement weather. However, in this version, Itsy Bitsy doesn't just start again after an unsuccessful foray up the spout; she decides to solve the problem.

We follow the spider to a store where she tries to purchase something to keep dry. Upon finding the local currency does not include dead flies; she offers to work for the storekeeper. She saves her earnings and buys the necessary tool to allow her to stay dry when it rains.

The story includes opportunities to discuss employment and wages, saving, and specialization. (She has special talents to trade for a wage. She doesn't just expect a job because she asks.) One can also discuss money if one wants to go that deep. (Why aren't dead flies considered a viable currency?)

For those of you trying to introduce some basic economic or financial concepts, this is a good book to use. It generates a lot of discussion among the very young about jobs, about saving, and even offers opportunities to discuss why and how education helps us get the job we want.

I hope to hear from some of you who are familiar with the book and perhaps have even used it in class.