Rdan points to a ‘National Budget Simulation’ program that is apparently part of Massachusetts economics education for grades 4-12. I was surprised when I clicked on the link because the federal budget seems like a really strange place to start economics education.

It seems important to start economics education with the economics concepts that kids can actually use in their lives. If I had control over what economics some kids learned in school, I think this would be my list:

  • Opportunity cost
  • Gains from trade (in the very micro sense; you trade money for a sandwich because the sandwich is worth more than the money)
  • Incentives
  • Importance of trade offs
  • Emphasis on the idea that everything has value (time, money, lack of garbage, etc.)

At a more advanced level

  • Marginal thinking
  • Efficiency of markets
  • Interest rates, Net Present Value
  • Consumption smoothing

I also think it would be useful to teach Utility and Expected Utility, but I don’t think it is possible to get to those topics.

Arnold Kling had post on a similar topic a while back.

As a side note, I think I would like to replace most of pre-calculus with basic probability theory from a Bayesian perspective with some heuristics and biases thrown in. Probability theory is a useful abrstraction for all sorts of problems, and it would also make that optional statistics class a lot less difficult if you could teach it from a bayesian perspective.