Why teach economics and personal finance in schools?

Below are six of many ways that economic education can provide students a better understanding that will be the foundation for personal success and contribute to the success of the community and our nation.

Benefit/cost analysis should be an integral part of how one makes a decision. Whether a personal, business or government decision, benefit/cost analysis will encourage sound, thoughtful decision making. 

Taking advantage of school and education to develop one’s human capital is essential to setting and reaching goals in life. The more students understand and consider the skills, knowledge, experience, and personal characteristics that contribute to success in our dynamic global economy, the greater the likelihood they will continue investing in their human capital and achieve their goals.               

What determines the prices we pay? Whether it is the price of a product, what someone will pay for labor, or the cost of credit, understanding the factors that determine a price will make students better consumers and make them better employees by understanding the market forces that affect the wages employers can pay.

There is a role for government in a market economy, though not complete agreement on when or in what way government should intervene. In general, government intervention is appropriate whenever a government policy or service’s benefits outweigh the costs. While people will disagree on appropriate government involvement, if any, in particular situations, it is essential for all to have foundational knowledge to consider the various arguments and draw a reasoned decision intelligently. 

Personal finance includes the study of how people earn, use, and manage money. To be effective, financial literacy requires an understanding of certain basic economic principles that form the essential foundation for one’s ability to manage money and prepare for the future.

We live in a global economy. What does that mean, and what are the challenges and opportunities that come with this? An understanding of 21st-century globalization begins with one principle, the principle of exchange. People will only exchange if they expect to gain more than they give. When they exchange, they give up something of lesser value to themselves for something they want more. As a result, both parties are better off.

(Source: National Association of Economic Educators)