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Why Economics?

“Economics? For kids? Really? Why?”

Simple: complex problem solving.

A quick glance at the most recent Future of Jobs report produced by the World Economic Forum shows that complex problem solving is expected to be the most in-demand workplace skill for the foreseeable future. The economic way of thinking is a pragmatic approach to problem solving, dealing with issues big and small, personal and global.

Economist Peter Boettke, professor at George Mason University and author of Living Economics, reminds us that “economics puts parameters on people’s utopias.”

One of the first lesson of economics is that, as a result of scarcity, people have to make trade-offs about how resources are used to improve the human condition. While kids may be endlessly creative in their approach to problem solving (another highly sought-after skill), creativity alone does not solve problems, and neglecting the trade-offs needed to solve one problem can often result in significantly greater problems somewhere down the line. This is why these problems can be so complex in the first place.

It is easy to craft a solution to a problem. How do we feed all of the hungry in the world? Make more food and give it to them! Actually solving that problem, on the other hand, is quite complex. Is this a problem of production, distribution, or some other issue? Do we need more farm land? What does that do to the environment? What about technology to make agriculture more productive? Where do we obtain the resources to make that happen?

Yes, this does prove to be a more complex problem to solve, once we understand that resources are scarce and different people around the world have different beliefs about the trade-offs that ought to be made. One of the most important constraints that must be considered when trying to solve complex problems is the limitations of our own knowledge. As Nobel laureate F. A. Hayek famously declared, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Some global problems cannot be solved with global solutions, but must be solved at the local level with varied approaches depending on the resources and customs available. A study of economics, above all else, helps us to approach a problem with the humility to accept such a reality. While it is good to consider the skills our children will require in their future jobs, the whole purpose of those jobs will be to improve upon the human condition, to solve problems for themselves and others, to make real life better for real people.

That is why we teach economics.

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