Thursday, March 12, 2015

Teaching Economics To Kids

The other day I was sitting on the couch working on my computer.  On the couch next to mine was a random kid named "Laelia" playing minecraft on her tablet.  And by "random" I mean a friend's kid.  I don't have any kids because, when it comes to this topic, Bryan Caplan doesn't hold a candle to Friedrich Nietzsche...
Every animal, including the bête philosophe, instinctively strives for an optimum of favorable conditions under which it can expend all its strength and achieve its maximal feeling of power; every animal abhors, just as instinctively and with a subtlety of discernment that is "higher than all reason," every kind of intrusion or hindrance that obstructs or could obstruct his path to the optimum (– it is not his path to ‘happiness’ I am talking about, but the path to power, action, the mightiest deeds, and in most cases, actually, his path to misery). Thus the philosopher abhors marriage, together with all that might persuade him to it, – marriage as hindrance and catastrophe on his path to the optimum. Which great philosopher, so far, has been married? Heraclitus, Plato, Descartes, Spinoza, Leibniz, Kant, Schopenhauer – were not; indeed it is impossible to even think about them as married. A married philosopher belongs to comedy, that is my proposition: and that exception, Socrates, the mischievous Socrates, appears to have married ironice, simply in order to demonstrate this proposition. Every philosopher would say what Buddha said when he was told of the birth of a son: ‘Râhula is born to me, a fetter is forged for me’ (Râhula means here ‘a little demon’); every ‘free spirit' ought to have a thoughtful moment, assuming he has previously had a thoughtless one, like the moment experienced by that same Buddha – he thought to himself, ‘living in a house, that unclean place, is cramped; freedom is in leaving the house’: so saying, he left the house. The ascetic ideal points the way to so many bridges to independence that no philosopher can refrain from inwardly rejoicing and clapping hands on hearing the story of all those who, one fine day, decided to say ‘no’ to any curtailment of their liberty, and go off into the desert: even granted they were just strong asses and the complete opposite of a strong spirit. Consequently, what does the ascetic ideal mean for a philosopher? My answer is – you will have guessed ages ago: on seeing an ascetic ideal, the philosopher smiles because he sees an optimum condition of the highest and boldest intellectuality [Geistigkeit], – he does not deny ‘existence’ by doing so, but rather affirms his existence and only his existence, and possibly does this to the point where he is not far from making the outrageous wish: pereat mundus, fiat philosophia, fiat philosophus, fiam!…" - Friedrich Nietzsche, On the Genealogy of Morality

The opportunity cost of having a kid is way too high.  Not sure if that will ever change for me personally.

Most kids are annoying but Laelia, who's around 11, isn't too terrible.  So it's not the end of the world when she somehow manages to persuade my gf to bring her over.  But I don't want her to have too much fun when she's here though, or else she might want to come over more often.  Hence, Econ 101.  But it's not like I really need that much of an excuse to teach somebody about opportunity cost.

It took a few visits but Laelia eventually developed a pretty good grasp of the opportunity cost concept.  This puts her on par with Paul Krugman.  Which means that it doesn't feel like a real noteworthy accomplishment for either Laelia or myself.  Helping Laelia successfully grasp the "earner valuation" concept, on the other hand, now that would be something to write home about.

So there we were in the living room each doing our own thing.  Except for the part where she would frequently narrate out loud what she was doing in minecraft.  Whenever she did so I would think to myself... "unsubscribe...unfollow...".  My ears perked up though when I heard her mention something about using arrows to keep creatures away.  Ah ha!

If you read... Why I Love Your Freedom... then you would know why I thought "Ah ha!"

What follows is a very rough account of my bumbling first attempt to teach a random kid the next level of economics.  To be clear, at no point did I have her full attention.  Minecraft had most of it.  Perhaps I could have used some authority to get her full attention?  Naw....
No discipline is ever requisite to force attendance upon lectures which are really worth the attending, as is well known wherever any such lectures are given. Force and restraint may, no doubt, be in some degree requisite in order to oblige children, or very young boys, to attend to those parts of education which it is thought necessary for them to acquire during that early period of life; but after twelve or thirteen years of age, provided the master does his duty, force or restraint can scarce ever be necessary to carry on any part of education. - Adam Smith, Wealth of Nations
Adam Smith was so cool.


Xero: Did you say arrows?
Kid: Yeah
Xero: Imagine there's a target on this wall.
Kid: Ok
Xero: Now pretend that the target represents your preferences.  Errr... do you know what "preferences" are?
Kid: No
Xero: Oh.  Uh... your preferences are uh... things that you like.
Kid: Ok
Xero: So pretend that minecraft is an arrow.
Kid: Ok
Xero: How close is minecraft to the target?

[Here's my depiction...

To be clear, I didn't actually have either a target or an arrow.  This is just how it was supposed to look like in imagination land.  And I just "drew" this.

When I asked her how close minecraft was to the target... I moved the hand holding the imaginary minecraft/arrow closer and then further from the imaginary target.]

Kid: Close
Xero: Now here's another arrow [I grabbed the closest "arrow" in reach... Andrew Cohen's book Toleration]  Is this arrow close to the target?

[Unlike with minecraft, this time the "arrow" (product) was actually something that I could hold in my hand.  I also moved it closer and then further from the imaginary target when I asked her the question.]

Kid: No
Xero: What about this other arrow?  [I reached over and grabbed the second closest "arrow"... a box of Samoas (girl scout cookies)].  Is this arrow closer to the target?

Kid: Yeah
Xero: Ok [At this point I wasn't exactly sure what was the best way to proceed.  So I sat there thinking for a bit while she continued playing minecraft.]
Kid: Ooooo! iron!
Kid: I really want to watch Caroline. [I thought that Caroline was some new movie.  Later, when I googled for it, I guessed she meant Coraline.]
Xero: Let's say that you spend your money on Caroline.
Kid: I don't want to watch it that badly!
Xero: Hah!  You want your mom to spend her money on Caroline for you?
Kid: Yeah
Xero: Do you think the producer of Caroline is happy when your mom gives him money?
Kid: Yeah
Xero: Are you happy when people give you money?
Kid: Yeah
Xero: Are the girl scouts happy to get money?
Kid: Yeah
Xero: Are the producers of minecraft happy to get money?
Kid: Yeah
Xero: Was Andrew Cohen, the person who wrote this book, happy when I bought his book?
Kid: Yeah
Xero: So here's the target... [again I made an imaginary target with one arm and held an imaginary arrow in my other hand].  If people want more money do they try and shoot the arrows closer or farther from the target?
Kid: Closer!
Xero:  Exactly!  Every time we buy something we let the producer know that that their arrow, a product, was close to the target, our preferences.  So whenever you give somebody money... you're saying "Hey man nice shot!"


What ended the lesson was when I tried to teach her the terms "efficient allocation" and "inefficient allocation".  She gave me a blank stare and didn't even attempt to repeat the terms.  And I didn't blame her.  When I said the words out loud to her, it helped me especially appreciate that the terms sound like indistinguishable gibberish. Certainly it would have helped if I had written the words on a chalkboard.  Most people are visual learners.  But it's really preferable to have "tools" that are easier to use.   The revolution was postponed for lack of simpler jargon.

What was super neat though was how quickly my econ lesson, as terrible as it was, was put to good use.  That evening she wanted to watch something on Netflix that really didn't match my preferences.  So I quickly pointed out that what she wanted to watch was close to her target... but really far from my target.  This immediately registered with her and she agreed to keep searching.  After a bit of searching we settled on one of the Fred movies.  Trust me, it could have been worse!

Perhaps an AAR (After Action Review) is appropriate.

What was supposed to happen?

The mission was to teach a kid about earner valuation.  Whenever Laelia is as happy as a kid in a candy store... she should fully understand and appreciate that, because of consumer sovereignty and producer incentives, there are numerous products (arrows) that are close to her preferences (target).  In other words, she should know where better options come from.

What happened?

I used the idea of arrows and a target to try and help illustrate the relationship between preferences and products.  Plus, I tried to explain that, because producers want more money, they try and shoot the arrows closer to people's targets.

What could be improved?

Maybe it would have helped to actually have a lesson plan?  Perhaps it would have helped if she could have seen the disparity in our preferences...

Couldn't hurt to throw in a picture of two people trading and considering what is being gained/lost...

Ideally there should be a book or video that wonderfully/accessibly illustrates the story that I'm struggling to tell...

  1. Choice... we have to choose
  2. We all want to choose the most valuable option (MVO)
  3. Spending has a cost, and an opportunity cost
  4. Choosing the MVO depends on accurate information
  5. Choosing/spending has consequences
  6. Producers aren't omniscient
  7. How we spend our money communicates what our preferences are
  8. Producers want more, rather than less, money
  9. The supply moves closer to our preferences
  10. Everybody benefits because everybody is free to choose

It really seems like this entire story should already exist in some book or video for kids.  Shouldn't it be surprising if it doesn't?  Found this great website... EconKids.  It lists numerous children's books that can help kids understand important economic lessons.  I didn't have a chance to go through them all.  But if anybody does find the "complete" story either there or someplace else... then please let me know!  Because it's got to be a big problem if such a book/video doesn't already exist.

What's the earliest age that an average kid would be able to understand/appreciate this story?  If anybody does attempt to teach/tell this story to some kid... then please let me know the following...

  1. how old the kid was
  2. how you told the story
  3. how well the kid grasped it

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