All I really need to know I learned in Economics

            It occurred to me while practicing English with my nephew from Ukraine that not everyone has a taken a course in economics. 

            Try teaching an English learner the law of diminishing returns – it’s not exactly English basics.  Our biggest fear was that he would have to interpret an economics lecture as part of his final English exam.  Thankfully, it didn’t happen.

            Nevertheless, I gave him one of my old economics text books to brush up on economic theory.  For some reason he hasn’t taken me up on it since passing his exam.  He prefers John Grisham.  Sheesh!

            The theories of economics are actually quite interesting, never mind the horrendous formulas that prove these theories.  Economics can be broken down into simple concepts, which help explain so much about our world today.  In fact, economics is so basic, it can even be taught to children before they set foot into school.

Like a true nerdy parent, I’ve come up with my own economics lesson plan for young children.  Feel free to use these rudimentary lessons on your own children, if they are of age (and no, 40 is still not too old).  You can improvise, but the lessons would go something like this:

            Lesson #1: Why Do Toys Cost So Much?  Remember the dolly you’ve been saving up for the last three months, where every penny (I mean, nickel) from your allowance was put in your piggy bank so you could buy it at Christmas?  Well, the cost has gone up by $5 and you probably will have to save for one more month before we can go to the store and pick her up.  Don’t cry, this is a simple reality of life – it’s called INFLATION.

            Lesson #2: Why Can’t I Have Both?   I’m going to give you two choices, but you can only pick one because you only have one dollar to spend.  You can either have the candy, or you can have the toy.  You want the toy?  Okay, then you can’t have the candy – no, you can’t, and stop crying.  The candy is the OPPORTUNITY COST of spending the dollar on the toy.

Economics: it's so much better than playtime

            Lesson #3: When Cookies Hurt.  How much did you enjoy that first cookie?  You really enjoyed it, didn’t you?  Here’s another one – is it better than the first?  Here’s a third, how about this one – is it even better?  How about the fourth?  You like it even more?  Are you serious?  Oh, now your tummy hurts.  Okay, so what did we learn?  With each additional cookie, your overall enjoyment level diminishes.  In consumer and production theory, this is called THE LAW OF DIMINISHING RETURNS.

            Lesson #4: Where Does Money Come From? (For advanced learners)  Let’s say that you borrowed some money from your friend so that you could buy some candy at the store.  Your friend wants her money back tomorrow, but you get your allowance only in three days.  You know it’s wrong, but you go into Daddy’s wallet anyway and “borrow” some money to pay back your friend.  This is very bad, but governments do it all the time.  This is a form of MONETARY POLICY called QUANTITATIVE EASING.

            And that, my child, is the wonderful world of economics.  You still crying??