Economic Literacy (via Econolog)

Arnold Kling at EconLog has a nice post on Economic Literacy. He links to the most recent Wall Street Journal Econblog - a discussion between Russell Roberts and William Polley , titled "Knowledge Deficit". In it, Roberts says,

...I break economic literacy into two components -- factual and conceptual. Alas, most well-educated Americans are illiterate in both areas.

...What is the essence of the economic way of thinking? A good starting point is Frederic Bastiat's idea that what is seen, the direct effect of a policy, is often just the beginning of its impact. Equally or more important is what is not seen. The world would be a better place if people understood that the intention of a policy (no price gouging after a hurricane, for example) does not capture the full effect on our well-being.

Kling goes on to ask his readers how they would devise a lesson to teach first-year Econ students how to understand the role of markets in addressing supply disruptions caused by Katrina. The commenters present some excellent and creative ideas.

The WSJ EconBlog authors mention that they think one of the problems is the "mechanical" way that Econ is still sometimes taught at the intro level. Arnold's commenters' suggestions are pretty much anything but.

However, I think that the real problem in teaching Econ (and Finance, too) is something I recently wrote about - trying to cover too much material in the course of a semester. You can take the top inch off ten square miles of territory, or you can take a one-foot wide core that goes down a couple of miles, but not both. Actually, somewhere in-between is probably best, but I think educators all too often err on the side of "but we have to cover all these topics."

The other advantage of covering a smaller number of topics is that you can tell more stories, use more analogies, and engage the students in more give and take (and do more stuff like Arnold's commenters suggest).