How Can I Make Better Choices?

Keystone Principle #7 – Economic Thinking is Marginal Thinking

Voluntary National Content Standards: #2

Connection:

Marginal thinking is a special term to describe something children do every day.  It means we evaluate our choices one at a time, based on the costs and benefits we are able to identify at the time.  Adults sometimes try to make this concept more complex than it really is.  Ideally, during this month you will provide your students with many opportunities to consciously identify decisions they must make.  Explore with them how to frame the decision based on where their situation stands at that moment, weighing whether the choice they are about to make will make them worse off or better off in the future.

For example, it is time for recess, and Jose has only a very light jacket to wear.  He has been wearing the same jacket all fall, but today, something is different.  The weather has turned quite cold and you, his teacher, are concerned he will be too cold.  Rather than giving Jose a stern lecture about being prepared for the weather and reaching into your lost and found box to find something he can use temporarily, help him to own the problem and be part of the solution.  First, what is the problem?  (Jose will be too cold if he goes outside).  What are some of the possible solutions?  You can offer suggestions, but encourage him to think of ideas.  (He can call his mother to bring him a coat; he can spend recess in the principal’s office instead of being with the class; he could  wrap himself in layers of newspaper under his jacket  if you have any handy; he can go outside and be a little cold.)  For each solution, have him identify possible costs (the rest of the class must wait for Jose’s mother to come, Jose’s mother will probably be displeased, Jose will miss out on all the fun stuff while he sits in the principal’s office, or the class must wait while Jose wraps himself in newspaper; he could endure the discomfort of being cold ) and possible benefits (a shortened recess is better than no recess; although he may miss recess, he will not have prevented his friends from enjoying it.)   This exercise will be just as effective if you involve the whole class in the problem and its solution.

As this illustration shows, we make our decisions one at a time.  Teachers respond to individual classroom situations as they occur – one at a time (which is not the same thing as being prepared for multiple eventualities).  When faced with a decision, the student must weigh whether having the additional benefit of doing something is worth the additional cost it imposes.

Use issues that organically bubble up in class. Are they learning multiple applications of their artistic talents?  How do they decide which one to use? Are you teaching a new writing or reading skill?  How frequently should they practice in order to internalize the skill?  Should they complete their assignments in a slap-dash manner or work carefully?  By explicitly asking these questions and inviting open participation, you will be able to provide your students with invaluable training in decision-making, one choice at a time.

Life is full of the trade-offs we learn to identify through marginal thinking.   From playground competition to forging friendships to navigating the demands of school and family life, a significant challenge that children learn to master on the way to adulthood is learning to balance competing demands.  Marginal thinking gives us all a logical framework for ensuring that we adequately evaluate our costs and our benefits before deciding what to do.

Objectives

I. Understanding

  • In thinking economically, “marginal” describes the additional cost (or the additional benefit) of a given behavior.
  • The question economic thinkers ask is “Do my marginal benefits exceed my marginal costs?”  Other folks might ask “Does doing one more thing really make me better off?”  These are really the same question.
  • Inherent in these questions is the notion of MAXIMIZING BENEFIT and MINIMIZING COST.  Economics assumes a rational person would seek to maximize benefits and minimize costs.  The benefits and costs we consider are not only quantitative.  Our personal value system is a large part of how we view our benefits and costs.
  • We tend to “hang on” to questionable decisions made in the past because we want to get value out of the time, effort, or dollars dedicated to some prior activity.  We say, “I can’t sell my house, sell a stock, quit working toward a degree in art history, stop studying for a test, fire Smith, or change occupations because of all my time, dollars, or energy that I’ve already put in.”  Your time, dollars, and energy are sunk costs and are gone.
  • Sound economic thinking happens when we focus on the future.  You cannot undo past decisions, you can only make choices about the next decision that lies ahead.
  • Putting additional time or resources into something only makes sense if the marginal benefit exceeds the marginal cost. For example, studying for a test and sleeping are both good things for us to do.  Unfortunately, you can’t sleep and study for a test simultaneously.  You must make an economic choice about when studying is no longer productive and sleep would be more a beneficial choice to you.

II. Skills

Students will be able to:

  • identify marginal costs and benefits
  • identify sunk costs
  • define utility

Activities

I. Concept Vocabulary

  • Marginal – an economic word that describes the additional cost (or the additional benefit) of a given behavior
  • Marginal Cost – The increase in a producer’s total cost when it increases its output by one unit
  • Marginal Benefit – The additional gain from consuming or producing one more unit of a good or service; can be measured in dollars or satisfaction
  • Sunk Costs – things you have already given up in order to try to get something else
  • Utility – An abstract measure of the satisfaction consumers derive from consuming goods and services

II. Journals

Initial Prompt (to be done during the introduction of this monthly theme/principle):

  • If it is in a person’s best interest to maximize their benefits and minimize their costs, why do you think people often make choices that cost them more than they gain?
  • Describe a time when you or someone you know made a choice like that.
  • What choices have you made (are you making) in your life that you would like to change?

General assignment:

Choose one or two of the quotations and write a journal entry of at least half a page. For K-2nd grades, you may do this exercise as part of a discussion. Or, ask the students to draw an illustration of a quotation or the monthly theme/principle.

  1. Restate the idea in your own words
  2. Say whether or not you agree with the statement,
  3. Explain why you agree or disagree
  4. Discuss how you have seen it expressed in your own life.

III. Quotations:

  1. “Parents can only give good advice or put them on the right paths, but the final forming of a person’s character lies in their own hands.”  Anne Frank
  2. “The discipline you learn and character you build from setting and achieving a goal can be more valuable than the achievement of the goal itself.”  Bo Bennett

Lessons

A Chair for My Mother (from the Powell Center Lessons)

“Do Many Hands Make Light Work?” (from the Powell Center Lessons)

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