2008 Woodie Awards
Economic edge
According to MSU professors, there are many reasons students should take time to understand economic principles
by Derek Wehrwein
Issue date: 3/20/08
Section: National and World News
Virtually everyone, from the toddler to the elderly, is affected in some way by the economy. But how much do most people actually know about economics?
The answer, according to a 2005 National Council on Economic Education (NCEE) survey, is not much.
The survey concluded that "Most adults and students have not mastered basic economic concepts," while noting only half of high school students have been taught any economics in school.
But according to Minnesota State economics faculty, there are very good reasons for learning about economics.
"What we say is that if you study economics you will make better decisions - you'll be a better worker, a better consumer, a better investor and eventually, you'll be better citizen," said professor Ashok Chowdhury.
Chowdhury is the director of the MSU Center for Economic Education, which works to educate citizens - especially high school students - about economic concepts and policy. The center - an affiliate of the NCEE - offers a number of workshops and seminars and hosts a yearly "Southern Minnesota Economics Challenge" for area high school students.
Chowdhury indicated that recent concern about the U.S. economy has raised awareness of economic issues, noting "everybody's talking about the economy" right now. He said he often has his students read newspapers and look for economic-related news.
Reading newspapers is precisely how Shawn Osell became interested in economics. As a junior high school student he began reading the Star Tribune and started paying special attention to articles involving the subject. Today he teaches economics classes at MSU and tries to get students interested by pointing to the economy's impact on their lives.
"I point to what's going on in the actual economy: 'here's what we're learning and this is what's happening now in the U.S. economy,'" he said.
For Osell, there's a very simple reason why college students should care about economics.
"Students go to college to get a job better than they otherwise would have," he said. The better the economy, Osell indicated, the better the chance of getting a good job.
The economy in turn is affected by economic policy, which has received increasing scrutiny as fears over a recession mount.
In the latest admissions of economic struggles, U.S. Treasury Secretary Henry Paulson described the economy Tuesday as being "in sharp decline" and Vice President Dick Cheney said Wednesday the economy is going through a "rough patch." That same day the Federal Reserve cut interest rates by 0.75 percent - its largest cut in more than 15 years - in an effort to boost the economy.
Despite the prospects of an uncertain future, professor Ved Sharma is careful to warn against overreacting to a downturn. Sharma, the chair of the MSU Economics Department, notes that the economy will always have "its ups and downs."
"It's down right now and everybody's mood is sour at this time," he said. "They think, 'this is it, it'll never come back again'…. But it will come back again."
Osell expressed similar thoughts.
"Business cycles are normal," said Osell, who noted the U.S. won't officially know if it's in a recession - which is a decline in GDP for at least two successive quarters in a year; more severe than a downturn - until this summer. "When the economy slows down, markets are just adjusting. The government tries to get involved and tries to keep things running smoothly, but that's not easy to do."
Osell said the economy has been fairly healthy since the mid 1980s, with the exception of a relatively minor recession in 2001.
"Even during that last recession in 2001, people thought that the sky was falling and it turned out be a small and short-lived recession," he said.
Assistant professor Kwang-Il Choe indicated it was likely the state of the current economic situation in the U.S. could turn out to be more serious than the 2001 recession, however. Choe noted the current economic instability originates largely from the subprime mortgage crisis, and coupled with inflation, has the potential to cause serious harm. The crisis has already seen the dramatic fall of U.S. housing prices and the foreclosure of thousands of homes.
"We are in a critical situation," Choe said. "We don't know what will happen in the near future."
In the meantime, however, Choe and other faculty recommend college students learn about basic economics concepts, including supply and demand, the business cycle, inflation and GDP (gross domestic product).
"People in society face a trade off - we can't get all we want," said Choe, who indicated learning about economics improves a person's analytical abilities and decision making. "For example, if you want to have time to hang out with friends then we need to sacrifice our good grades. We need to understand the trade off in decision making - when we choose one thing we must sacrifice others. People also respond to incentives - when incentives are given, people suddenly react differently."
"The base of economics is supply and demand," added Chowdhury. "Somebody can understand and see how they're affected at a micro level - for example, why the price of gas is going up. At the macro level, the chief thing we focus on is inflation, employment and economic growth as measured by GDP."
Derek Wehrwein is the Reporter variety editor
The answer, according to a 2005 National Council on Economic Education (NCEE) survey, is not much.
The survey concluded that "Most adults and students have not mastered basic economic concepts," while noting only half of high school students have been taught any economics in school.
But according to Minnesota State economics faculty, there are very good reasons for learning about economics.
"What we say is that if you study economics you will make better decisions - you'll be a better worker, a better consumer, a better investor and eventually, you'll be better citizen," said professor Ashok Chowdhury.
Chowdhury is the director of the MSU Center for Economic Education, which works to educate citizens - especially high school students - about economic concepts and policy. The center - an affiliate of the NCEE - offers a number of workshops and seminars and hosts a yearly "Southern Minnesota Economics Challenge" for area high school students.
Chowdhury indicated that recent concern about the U.S. economy has raised awareness of economic issues, noting "everybody's talking about the economy" right now. He said he often has his students read newspapers and look for economic-related news.
Reading newspapers is precisely how Shawn Osell became interested in economics. As a junior high school student he began reading the Star Tribune and started paying special attention to articles involving the subject. Today he teaches economics classes at MSU and tries to get students interested by pointing to the economy's impact on their lives.
"I point to what's going on in the actual economy: 'here's what we're learning and this is what's happening now in the U.S. economy,'" he said.
For Osell, there's a very simple reason why college students should care about economics.
"Students go to college to get a job better than they otherwise would have," he said. The better the economy, Osell indicated, the better the chance of getting a good job.
The economy in turn is affected by economic policy, which has received increasing scrutiny as fears over a recession mount.
In the latest admissions of economic struggles, U.S. Treasury Secretary Henry Paulson described the economy Tuesday as being "in sharp decline" and Vice President Dick Cheney said Wednesday the economy is going through a "rough patch." That same day the Federal Reserve cut interest rates by 0.75 percent - its largest cut in more than 15 years - in an effort to boost the economy.
Despite the prospects of an uncertain future, professor Ved Sharma is careful to warn against overreacting to a downturn. Sharma, the chair of the MSU Economics Department, notes that the economy will always have "its ups and downs."
"It's down right now and everybody's mood is sour at this time," he said. "They think, 'this is it, it'll never come back again'…. But it will come back again."
Osell expressed similar thoughts.
"Business cycles are normal," said Osell, who noted the U.S. won't officially know if it's in a recession - which is a decline in GDP for at least two successive quarters in a year; more severe than a downturn - until this summer. "When the economy slows down, markets are just adjusting. The government tries to get involved and tries to keep things running smoothly, but that's not easy to do."
Osell said the economy has been fairly healthy since the mid 1980s, with the exception of a relatively minor recession in 2001.
"Even during that last recession in 2001, people thought that the sky was falling and it turned out be a small and short-lived recession," he said.
Assistant professor Kwang-Il Choe indicated it was likely the state of the current economic situation in the U.S. could turn out to be more serious than the 2001 recession, however. Choe noted the current economic instability originates largely from the subprime mortgage crisis, and coupled with inflation, has the potential to cause serious harm. The crisis has already seen the dramatic fall of U.S. housing prices and the foreclosure of thousands of homes.
"We are in a critical situation," Choe said. "We don't know what will happen in the near future."
In the meantime, however, Choe and other faculty recommend college students learn about basic economics concepts, including supply and demand, the business cycle, inflation and GDP (gross domestic product).
"People in society face a trade off - we can't get all we want," said Choe, who indicated learning about economics improves a person's analytical abilities and decision making. "For example, if you want to have time to hang out with friends then we need to sacrifice our good grades. We need to understand the trade off in decision making - when we choose one thing we must sacrifice others. People also respond to incentives - when incentives are given, people suddenly react differently."
"The base of economics is supply and demand," added Chowdhury. "Somebody can understand and see how they're affected at a micro level - for example, why the price of gas is going up. At the macro level, the chief thing we focus on is inflation, employment and economic growth as measured by GDP."
Derek Wehrwein is the Reporter variety editor
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