Business World, 13 April 2014



Under his father’s tutelage, the child prodigy John Stuart Mill began learning Greek at age three, was reading Latin at eight, and was devouring history and political science when he was between four and seven years old.

Significantly, however, his father did not begin teaching Mill economics until he had reached the ripe old age of 13 — which for us normal people is something like 20-25. But then again, Mill’s economics tuition was no ordinary one. It came “straight from the teat,” as it were, from both his own father James Mill and the latter’s friend David Ricardo, who were at the cutting edge of economic theory of their time.

Mill’s example points to the maturity needed to appreciate and ultimately benefit from theoretical economics. It also suggests what is wrong with economics education in our schools. We are teaching economics that — in the language of the Responsible Parenthood Act — is not “age-appropriate.”

Our schools currently teach economics to 16- or 17-year-old high school seniors. Primarily taught are topics in academic economics, e.g., price, demand and supply (even elasticity!), taxes and market interventions, gross national income, money and fiscal policy, inflation, employment, trade, and so on — all doubtlessly applied with varying degrees of ingenuity to current events and pressing national issues. From experience, however, very little of this makes any impression on students, primarily because they find little in it that is personally useful and relevant. This makes the subject extremely “boring” (the death sentence among teenagers) and therefore eminently forgettable. The result is a huge waste of time for teachers and students alike.

Short of an epiphany at the education department, the situation is unlikely to change even with the advent of the K +12 reforms. This is a shame, since there is actually a better use of students’ time in high school — gaining financial literacy. But this involves moving away from teaching economics as an academic subject and instead organizing material around students’ current and prospective life-situations.

Teaching economics as a social-science subject in high school has value primarily in preparing students to become informed citizens who can participate in policy debates, primarily a collective political process (e.g. elections, media). At their age, however, high school students are bound to confront this process mostly as outside observers. Social and economic issues, after all, are distant and complex; proposed policy responses are often ambiguous and debatable; and the means for young people to influence social outcomes are ill-defined or non-existent. In this sense academic economics is age-inappropriate for high school students.

Instead of emphasizing how students should think of and form opinions on public issues, economics education for high school is likely better focused on helping students help themselves — i.e., escaping or staying out of poverty. This is not an abdication of social responsibility for solipsistic gain. On the contrary, it enhances the person’s first duty to society, which is to rely on oneself and not be a burden on others — a virtue that Adam Smith called “prudence.”

In lieu of computing elasticities and slopes of curves, an age-appropriate program for economic and financial literacy ought to deal with more existential questions such as: what young people can expect to earn from careers based on their life-goals, skills, and achievements; why prudent budgeting and prioritization of expenses matters and what it entails; the crucial importance of planning a financial future and the role of saving; the responsible use of borrowing and credit; rules for wise financial investment (including how to avoid getting ripped off); and the various uses and options for insurance (medical, life and accident, retirement). These, by the way, are the same topics recommended by the US Council for Economic Literacy for inclusion in school curricula. (Yes, the Great Recession has caused even Americans to realize that wayward spending and borrowing behavior among citizens can have devastating social and economic effects on the whole society.)

But as long as we are at it — especially with the Supreme Court’s validation of age-appropriate sex education — a real-life discussion of the financial and career consequences of early parenthood and unplanned pregnancies would be in perfect order. This is especially urgent in view of the recent findings of the 2013 Young Adult Fertility and Sexuality study that one in every three Filipinos aged 15-24 engages in premarital sex, and that 73% of males and 84% of females do it unprotected against pregnancies or possible STDs. Proper sex education cannot simply be about the plumbing. It must certainly include the costs and consequences of differing reproductive behaviors in terms of emotional pain and frayed social relations, direct monetary consequences, and foregone career and earning opportunities. In short, sexuality is also an economic and financial matter, and only artificial walls separate what are in reality conjoined aspects of human decision and action.

One of the distinct capabilities of the higher primates is that distinctly bourgeois trait of delayed gratification — the ability to sacrifice a present pleasure in anticipation of a future reward. It is most developed among humans, who have the ability to conceive of a distant future and regulate their life to adapt to or attain that future. Saving, investment, roundabout methods of production, credit, institutions of trust — indeed most of civilization itself and its attendant prosperity — are built on nothing more than this ability. The enhancement of such a human trait among the young people of society is an overriding task of the public education system. If, to achieve that goal, we must tolerate the fact that high school students cannot compute the arc elasticity of demand, then so be it.