October is Economic Education Month. The Council for Economic Education established the observance in 2021, based on the idea that students who have a firm grasp on basic economic concepts will be better prepared to make informed decisions throughout their lives.
As Scott Gilpatric, head of the Department of Economics at the University of Tennessee, Knoxville’s Haslam College of Business, and Scott Holladay, the college’s director of undergraduate programs in economics, point out, economics is a subject that’s often misunderstood, and gaining a deeper understanding of it can benefit people of all ages in a variety of ways.
What are some common misconceptions about economics?
Gilpatric: “Many people think of economics as being only about macroeconomic data — like gross domestic product, unemployment and interest rates — or they think about economics as simply supply and demand. The discipline of economics is actually much broader, beginning with a framework for how people make decisions in pursuit of their goals. In that framework, we can study almost any question in social science. These might be traditional economic questions, such as how markets respond to an energy price spike and how the impact is distributed. Often, though, we study questions that may seem very different from common conceptions of economics about such things as the determinants of fertility in a population, or the incentive to engage in cheating in sports and other contests, or how to best design an auction.”
What kinds of careers do economics majors pursue?
Holladay: “One of the biggest advantages of an economics major is the flexibility it gives graduates. Economics majors can work anywhere from data intensive quantitative roles for Major League Baseball teams to policy analysis with the U.S. Congress. The most common jobs are in consulting and research analyst roles, both of which use data and economic insight to advise companies on important decisions. These jobs come in all types of industries, giving economics majors the ability to career-hop from sector to sector to find challenging and rewarding opportunities. Economics majors also are prepared for graduate school and some students go on to get MBAs, law degrees or doctorates in social sciences.”
Besides preparing for one of those careers, what are some advantages of majoring in economics?
Holladay: “Economics is a tool for understanding the world around us. The skill set economics majors develop gives them the ability to think critically about the way people, businesses and the government interact. This insight can help make sense of the way your family divides up chores, your neighbors interact with the HOA and your employer responds to regulations from the government. Understanding why people and organizations respond the way they do builds empathy and helps economics majors become community leaders who can take advantage of their knowledge to make the world a better place.”
How can parents begin introducing economic concepts to children at a young age?
Gilpatric: “Some parents try to motivate their kids with financial incentives to clean their room or do their homework, or they collect a tax on money their children make from babysitting to support the household (which might teach a lesson about contributing to the public good or teach them to hate taxation that feels unfair, depending on your perspective). That may work for some, but I’d suggest something more basic. The most fundamental concept in economics is “opportunity cost”: every time you make a choice, you forego alternatives and the value of the next-best alternative is the opportunity cost of the choice you make. This is obvious with money. It can only be spent once, and if you spend it on a toy, you forgo something else you could have purchased. I think it’s good for children to think about this more generally. For example, if they choose to do something they were told not to do, the opportunity cost may result in a loss of trust and forgoing the privileges they might have had if they had maintained that trust.”
For people who are out of school, how can economics be a topic of lifelong learning?
Gilpatric: “We all encounter basic economic problems every day — how do we best allocate our scarce time and financial resources? More interesting, I think, is using the lens of economics to think about social and policy questions. We all have things we’d like to see change in the world, whether that’s a desire for better educational opportunities for disadvantaged children or for less regulatory red tape standing in the way of business development. Economics provides a framework both for understanding why these things are currently as they are and for the difficult work of achieving positive change. If you look for it, there is a lot of good economic analysis that may really change how you think of the issues about which you care most.”
Stacy Estep, writer/publicist, email@example.com