When I was asked to write an article about economics which
focused on family, I rather rashly promised to do it on the importance of
economic education for young people. It was only a little later that I
remembered that this is one area on which I am not well qualified to write without
being somewhat hypocritical. The truth of the matter is that my younger
siblings are not receiving a stellar economics education, not from me anyway.
And while I do mean to write, in the not too distant future, a civics
curriculum which gives a significant cameo spot to economics, until that time I
can only urge you to practice what I preach, and forgive me for not doing it
myself.

I’m sure that I don’t really need to make an elaborate case
in support of the thesis that we are not doing a good enough job teaching our
kids basic economic principles. Soaring consumer debt, the sub-prime loan crisis,
popular demands for economically ridiculous policies (in Canada, for example, paying
producers of green energy 80 cents per kilowatt hour while charging consumers
10 cents), and a studied contempt for those who do emphasize the importance of
adhering to economic principles (aka reality), reveal a systemic ignorance of,
or at least unwillingness to admit to understanding of basic money principles.

While many institutions can play a part in providing this
education, the family is the best place to start economics education for two
reasons. In the family, economic education can be most easily caught, as well
as taught. Parents have invaluable opportunities to teach their children about
important economic principles as they take them shopping (budgeting, taxation,
international trade, exchange rates), explain the mortgage bill (banking
system, debt, interest rates), and encourage them to set up a small “lemonade
stand” type enterprises (investment, pricing, supply and demand, dividends,
elasticity, etc.). It also provides the proper focus for economics, as young
people learn from the beginning how economics impacts ordinary families.

The list of things that young people should learn about the
economy and personal finance is long, starting with the basics such as how
compound interest works, to more complex issues such as how inflation happens
and why interest and exchange rates fluctuate. But even more important, to my
mind, than the specifics of economic theory and practice is worldview - the
framework for one’s economic views - and one in particular has been deeply
impressed upon my mind as a result of studying economics.

This worldview, which was first emphasized for me in Thomas
Sowell’s books Basic Economics and Applied Economics and subsequently
confirmed and reinforced by all of my economics textbooks, can be briefly
expressed by the phrase, “And then what?”. In economics a simple, seemingly
positive change can have effects that rebound through nations for decades,
potentially causing extremely negative results in the end. Careful economists
must think things through to their logical extensions, rather than being
satisfied with the first answer.

Economics also rams into your head like a pile driver the
fact that everything in life is a trade-off, a vitally important principle in
understanding both national policy and personal finance. You can only pay for a
vacation if you spend less on something else. The government may have to choose
between spending more on culture and spending more on healthcare.

Economics is the study of reality as it is. It teaches us to
think more carefully and thoroughly about the choices we face in life, to
understand that not every grand scheme is possible, and that all choices have
consequences. As we face a future of economic uncertainty and hard choices,
ignorance and denial of these realities is no longer an option.

Rebekah Hebbert is an
economics student living in Eastern Canada.