The Economics of Ignorance: Why Johnny Can’t Choose

The cold fact is that we live in a world where our wants exceed our resources. We must all choose what wants we will let go unfilled, which we will satisfy, and how we will do so. And since individuals have different wants, all societies must have mechanisms for deciding which resources are going to be used to satisfy which people’s wants. Economics is the study of these choices by both individuals (micro) and societies (macro). That most Americans don’t understand how these choices are made or how the economy works was recognized more the twenty years ago when the Council on Economic Education sounded the alarm about the poor state of economic literacy in the U.S.. Taking a page from a highly successful campaign to raise awareness about illiteracy (Why Johnny Can’t Read), they began to explain: Why Johnny Can’t Choose.

Five years ago, economic illiteracy came home to roost. Too many people and companies had made poor decisions because they didn’t understand the consequences of the choices they were making. The cumulative effect of those bad choices combined with poor government policy and a regulatory environment that looked the other way to put us in the worst economic calamity since the Great Depression. Foreclosures skyrocketed, employment plummeted, government bailouts and big budget deficits ensued. Lots of people suffered and are still suffering.

As we begin to climb out of this huge hole, some of the hardest hit states including Florida have vowed to diversify their economies and return to prosperity through targeted investment in entrepreneurial activity. Universities in these states have been asked to help achieve this objective by educating more students in the STEM disciplines and imbuing them with the entrepreneurial skills and acumen that will lead to the creation of scalable businesses that will become pillars of a new economy.

So when a committee of higher education leaders were asked to recommend ways to streamline the set of courses all students must take to graduate from a Florida college or university, guess which subject was among the courses they decided to remove from the general education requirements? Yep, economics. Anthropology, comparative politics, psychology, sociology and world history were deemed more appropriate to students general education. Really? Really.

When faced with constrained resources and a diverse set of wants, a committee that lacked even a single economist, recommended we eliminate the discipline that studies the exact problem that confronted them. They did this despite the experience of the last five years and the current emphasis state policy makers are placing on entrepreneurial activity and economic diversification.

Business students will of course continue to get a healthy dose of economics. We control these requirements and UCF may still require economics as part of its approach to general education. I would hope so. There is no crime in being economically illiterate, but it is irresponsible for our institutions of higher learning to claim that they are preparing citizens for leadership roles in the twenty-first century, a century that will be driven by a complex world economic system increasingly based on free markets, without providing these same students with a firm grasp of how this system works and influences the opportunities and choices that will confront them. That all UCF students would take these courses at UCF would also offer us greater quality control (and ensure full employment for UCF economists).

But, as UCF business students you should care that with this change many more Floridians will be allowed to graduate from college economically illiterate. These new graduates will vote on government leaders and their policies just like you and as the last five years made clear the decisions these people make about how they allocate their resources will impact your economic and financial future. In short, economic illiteracy generates negative externalities. A course on financial literacy would be useful too, but I don’t want to be greedy. Besides if you understand the economics, you can pick up the finance, while the reverse is less true.

The good news is that it’s not too late to influence the committee’s recommendations. So far, the committee has only asked for comment from faculty but a period of public comment is coming and it would be good for the committee to hear from students, alums and interested citizens. Watch for it. Or if you are so inclined, I would suggest you leave a comment here and I will make sure the right people see all of them at the appropriate time.

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5 thoughts on “The Economics of Ignorance: Why Johnny Can’t Choose

  1. This is just sad. Now I know economics isn’t the most interesting subject for everyone, but it’s vital in the development of critical thinking. Graduates should, no, NEED to understand even some of the most basic concepts like externalities and opportunity cost. We are already a nation that’s pretty economically illiterate and the idea of this getting worse (especially as I get older and closer to retirement) is terrifying. This global economy demands that people know how different markets operate.

    Personally, I believe that one of the problems we have in economics is that all too often it’s taught in a way that’s frankly dull and boring. I was lucky enough to get a teacher in high school who knew how to make economics “fun to learn.” We ran experiments that allocated resources efficiently, watched entertaining videos, and held discussions about the current world issues and how it pertains to the subject of economics. Granted I was in this class during one of the biggest economic downturns the world has ever seen, the course was taught in a way that made it interesting and easy for everyone to understand. To this day I keep in touch with my teacher, Mr. Robbins, who built the foundation for what I set out to do in my life. What I love most about being an Econ major is that it involves a little bit of everything (math, psychology, philosophy, finance, etc). It’s a melting pot of all the disciplines thrown into one all encompassing subject. This simple fact reminds me of what Mr. Robbins told me before I left his class (and ultimately graduated), “Economics is quite simply the study of how to get the most out of life.”

  2. Beyond raw and blatant self-interest I am having a difficult time seeing how this committee of the state could overtly exclude economics as a choice among the social sciences. This is clearly a power-grab serving the interests of particular fields of faculty and has nothing to do with student learning, student success, or anything else pertaining to students other than legislated monopoly power over their choices. I honestly find it exploitative. Given the model of self-interest so aptly predicts the behaviors of our social science colleagues, it seems crucial that students who are engaged in critical thinking have that model as an option for explaining human behavior.

    • Hi Bradley:

      I have no problem with people from other disciplines believing that their subject is the most important set of ideas in the universe and that all students should be exposed to these ideas. As a dean, I want everyone who works for me to think this of the classes they teach. Each of the fields selected for inclusion in the state-wide core offer unique perspectives that could benefit students.

      But in a world where the vast majority of students are seeking an education in an effort to improve their ability to compete in today’s economy, it seems odd to suggest that they can be successful in this effort without understanding the rules of the game they seek to play.

      • Dean Jarley,

        I agree that we would like for every faculty member in a college to believe strongly in their field, though after nearly 30 years in academe I have few worries about that. Turf wars, such as these, are common and rarely hidden well. They are the inevitable result of the incentives structures we use to preen and fund faculty lines in state institutions. We operate on an FTE model where the “butts-in-seats” variable is both economically and statistically the most significant variable. This affects curriculum and the fact that monopoly power exists to guide that curriculum means that rent-seeking will inevitably occur.

        I don’t know you or your career, but as a Dean, you “get to” (and inevitably, must) take a broader view. I am at the point in my career that I am less worried about the strength of the silo. I’ve come to realize that while economics is an extremely powerful explanation for human behavior, trade-offs, always and everywhere, apply: Even to economics, itself. Some of the most fruitful and enlightening teaching I do is interdisciplinary or multidisciplinary. For instance, I taught finance for seven years and I learned so much. In my principles of economics courses now my entire discussion of total revenues and costs revolve around a simple income statement. Students get to see that the disciplines of accounting, finance, economics, and marketing have significant reach into one another. (The research silo is far more difficult to break down but, I suspect, its time may be coming.)

        We are both avid cheerleaders for economics. We know that each discipline brings a powerful – but not omniscient – prism through which to view the world. To be honest, one of the real tragedies of the curriculum as it is laid out is that for all of the social science disciplines the choice has turned into a smorgasbord of low-level introductory courses which are typically marked by an encyclopedic approach that fails to show the real strength of the discipline. I’ve done my best to change the way I teach economics as a result.

        Perhaps we can meet sometime and really have a good conversation about these issues!

        Thank you for your response.

        Brad Hobbs

  3. This post, and the prior one that contrasted the benefits of the MBA vs. the EMBA experience resonate deeply with me.

    My career followed the track of corporate engineering with GE (after receiving my BSE) for 10 years in the field on an international scale before I decided to update my skills and business vocabulary/tools. I was fortunate enough to have my company sponsor me for a top-ranked EMBA program. It was the Dean described in his prior post, designed to advance high-potential candidates (I was lucky to have the chance) with a technical background into a strategic management role in the firm. The education was a true pivot point in my career.

    Two courses which stood out in my EMBA curriculum as very powerful learning experiences for me were micro and macro economics. These courses were the ‘logical glue’ that pulled everything together for me. Macro economics in particular taught me the importance of being a good business historian if I wanted to be a good strategic thinker in the present and the future. Micro gave me the framework to appreciate the rest of finance and the work of accounting.

    In summary, to drop economics from a business program would weaken the experience and the critical thinking framework students receive. I hope a wise committee and outside individuals can alter the direction this seems to be going.

    Bob Porter, PhD – UCF college of business

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