I remember two things from my high school economics class: credit cards have interest rates, and Moneyball is an interesting movie.
That class tried to cover too much information in too little time and, as a result, became so diluted that I didn’t get much out of the economics or personal finance content. I didn’t even know I wanted to major in economics until I was required to take principles of microeconomics in college.
As it turns out, I was lucky to receive any economics education in high school. According to the Council for Economic Education’s 2018 Survey of the States, less than half of U.S. states require students to take an economics course to graduate and about one third require a class in personal finance.
These results are startling because economics education is relevant to everyone. We all participate in the economy by entering the job market or buying goods and services, yet many of us leave high school with little to no understanding of economics and its impact on our everyday lives.
After learning about basic concepts like price controls and tax incidence, people would be more likely to understand the downsides of rent control or why an attempt to tax the rich, like the infamous luxury tax of the early 1990’s, could have unintended consequences.
Perhaps more importantly, economics teaches a way of thinking that is relevant beyond the classroom. Concepts like opportunity cost and incentives can help us make better decisions.
Opportunity cost is what you give up to gain something else. For example, you might think my cost of going out with my boyfriend is limited to the $8 I spend at Chipotle, but thinking in terms of opportunity cost means thinking beyond bank account balances.
My opportunity cost may also include alternate uses of my time (homework, sleep, Netflix) and alternate uses of my $8 (savings, candy, 8% of a textbook). Clearly, I must love my boyfriend.
Understanding opportunity cost can help you make more informed decisions in any situation, yet many of us miss out on this important concept in high school. I echo what another NDSU student said after participating in the Mancur Olson Scholars reading group, “I wish the public was more educated in economics.”
The concepts apply more broadly than many people realize, including in your love life.
Meet the Author
Kate Best is a Mancur Olson Research Fellow at the NDSU Center for the Study of Public Choice and Private Enterprise. She is an undergraduate studying economics and mathematics at North Dakota State University.