The fli ed

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The fli ed

  1. 1. The Financial Literacy Institute January 22 & January 23, 2008
  2. 2. Top Ten Economist Valentines <ul><li>10. “You raise my interest rate 30 basis points without a corresponding dropoff in consumer enthusiasm” </li></ul><ul><li>9. “Despite a decade of inflation, I still dig your supply curve” </li></ul><ul><li>8. “What do you say we remeasure our cross-elasticity?” </li></ul>
  3. 3. Top Ten Economist Valentines <ul><li>7. “You bring the butter, I’ll bring the gun” </li></ul><ul><li>6. “We can make beautiful music – and reach equilibrium – together” </li></ul><ul><li>5. “Further stimulus could result in uncontrolled expansion” </li></ul><ul><li>4. “Tell me whether my expectations are rational” </li></ul>
  4. 4. Top Ten Economist Valentines <ul><li>3. “Let’s assume that we have a ritzy hotel room and a bottle of wine” </li></ul><ul><li>2. “You stoke the animal spirits of my market” </li></ul><ul><li>1. “A loaf of bread, a jug of wine, and thou beside me watching the S&P 500” </li></ul>
  5. 5. Joke Set-Up: <ul><li>A woman hears from her doctor that she has only half a year to live. Her doctor her tells here to marry an economist and move to Scranton, PA. </li></ul><ul><li>The woman asks: “Will this cure my illness?” </li></ul>
  6. 6. The punch line: <ul><li>The doctor responds: </li></ul><ul><li>“No, but the half year will seem pretty long.” </li></ul>
  7. 7. The Set-up <ul><li>Told by John Kenneth Galbraith about himself </li></ul><ul><li>As a boy he lived on a farm in Canada. On the farm next to his there lived a girl he was fond of. One day they sat together near a cattle pen and watched as a cow and a bull were…”getting together” </li></ul>
  8. 8. The Set-up (continued) <ul><li>Galbraith turned to the girl and said (with a suggestive look) </li></ul><ul><li>“Gee, that looks like it would be fun” </li></ul>
  9. 9. The Punch line: <ul><li>She replied: </li></ul><ul><li>“Well…she’s your cow.” </li></ul>
  10. 10. The First Law of Economists <ul><li>“For every economist, there exists an equal and opposite economist.” </li></ul>
  11. 11. The Second Law of Economists: <ul><li>They’re both wrong </li></ul>
  12. 12. From the Hennie Youngman School: <ul><li>Two economists are walking down the street. One sees a dollar bill lying on the sidewalk and says so. </li></ul><ul><li>The second responds: </li></ul><ul><li>“No…if there were, someone would have picked it up.” </li></ul>
  13. 13. And finally…. <ul><li>They say that Christopher Columbus was the first economist. </li></ul><ul><li>When he left to discover America, he didn’t know where we was going and when he got there he didn’t know where he was. </li></ul><ul><li>And it was all done on a government grant. </li></ul>
  14. 14. Background <ul><li>Purpose – to increase the financial literacy of students & to develop a skilled workforce for a growing financial services sector in NEPA </li></ul><ul><li>Method – teacher training via use of proven materials and classroom/online instruction </li></ul>
  15. 15. Sponsors <ul><li>Financial support – </li></ul><ul><ul><li>Wall Street West/WIRED </li></ul></ul><ul><ul><li>National Council on Economic Education </li></ul></ul><ul><ul><li>Tom Hesser Chevrolet and BMW </li></ul></ul><ul><li>Sponsor Institutions </li></ul><ul><ul><li>Misericordia University & The University of Scranton </li></ul></ul>
  16. 16. Additional Instruction <ul><li>On-line learning over a 4 month period </li></ul><ul><li>Review of results from spring Stock Market Game </li></ul><ul><li>Final session – including evaluation </li></ul>
  17. 17. Financial Fitness for Life <ul><li>Materials include </li></ul><ul><ul><li>Teacher Guide (K-2, 3-5, 6-8, 9-12) </li></ul></ul><ul><ul><li>Student Workouts </li></ul></ul><ul><ul><li>Parents’ Guide </li></ul></ul>
  18. 18. Financial Fitness for Life <ul><li>Grades 9-12 22 lessons </li></ul><ul><li>Grades 6-8 17 lessons </li></ul><ul><li>5 Themes – common to both </li></ul><ul><ul><li>1: TNSTAAFL </li></ul></ul><ul><ul><li>2: Education Pays Off: Learn Something </li></ul></ul><ul><ul><li>3: Tomorrow’s Money: Getting to the End of the Rainbow </li></ul></ul><ul><ul><li>4: Spending and Credit are Serious Business </li></ul></ul><ul><ul><li>5: Get a Plan: Get a Grip on Life </li></ul></ul>
  19. 19. Financial Fitness for Life <ul><li>Foundation – learning to be a bricklayer </li></ul><ul><li>The Economic Way of Thinking </li></ul><ul><li>Decision Making </li></ul>
  20. 20. The Economic Way of Thinking <ul><li>The Handy Dandy Guide </li></ul><ul><li>1. People Choose </li></ul><ul><li>We always have choices </li></ul><ul><li>Resources are scarce </li></ul><ul><li>Economics: OR </li></ul><ul><li>? – Why do kids think that money grows on trees? </li></ul>
  21. 21. The Economic Way of Thinking <ul><li>2. All choices involve costs. </li></ul><ul><li>Choices come with costs </li></ul><ul><li>There is an opportunity cost for each choice </li></ul><ul><ul><li>Subjective </li></ul></ul><ul><ul><li>May not be monetary </li></ul></ul><ul><ul><li>Example – baseball in Chicago </li></ul></ul>
  22. 22. The Economic Way of Thinking <ul><li>3. People respond to incentives in predictable ways. </li></ul><ul><li>Incentive – benefit or cost that influences a decision. Example – money </li></ul><ul><li>Most decisions are made “at the margin” </li></ul><ul><li>? Is it rational to cheat? </li></ul>
  23. 23. The Economic Way of Thinking <ul><li>4. People create economic systems that influence choice and incentives. </li></ul><ul><li>In the U.S. – we rely on markets, choices and incentives </li></ul><ul><li>Main alternative – command economy </li></ul>
  24. 24. Example <ul><li>From the Cuban Constitution </li></ul><ul><li>Article 5 – The Communist party is to lead society in the construction of a socialist and eventually communist economy and political state </li></ul><ul><li>Article 14 – The government, not individuals, owns the means of production </li></ul>
  25. 25. Cuban Constitution (Continued) <ul><li>Article 15 – The government, not individuals, owns the land and all enterprises. </li></ul><ul><li>Article 16 – The government, not individuals, makes basic economic decisions </li></ul>
  26. 26. Market Economy <ul><li>1 Private ownership of resources </li></ul><ul><li>2 Free enterprise </li></ul><ul><li>3 Self-interest motives </li></ul><ul><li>4 Competition </li></ul><ul><li>5 Markets and prices </li></ul>
  27. 27. The Economic Way of Thinking <ul><li>5. People gain when they trade voluntarily. </li></ul><ul><li>Trade is mutually beneficial – “not a zero sum game” </li></ul><ul><li>Digression – what about those lousy baseball deals? </li></ul>
  28. 28. The Economic Way of Thinking <ul><li>6. People’s choices have consequences for the future. </li></ul><ul><li>Saving, investing and conserving – result in a higher standard of living in the future </li></ul><ul><li>No saving, investing = no growth </li></ul>
  29. 29. Decision Making <ul><li>There is no such thing as a free lunch </li></ul><ul><li>A wise decision weighs benefits and costs </li></ul><ul><li>Scarcity – results from limited resources, unlimited wants </li></ul><ul><li>Resources include – human, natural, capital, entrepreneurial </li></ul>
  30. 30. See “Questions” from FFL p. 12
  31. 31. Personal Decision Making – similar to Exercise 3.2 p. 13 <ul><li>See the Decision making grid </li></ul><ul><li>Step 1 – Define the problem </li></ul><ul><li>Step 2 – List the alternatives </li></ul><ul><li>Step 3 – Identify the Criteria (rules) </li></ul><ul><li>Step 4 – Evaluate the alternatives (“+” or “-” OR numerical scores) </li></ul><ul><li>Step 5 – Make a decision </li></ul>

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