The Economy | Teaching economics to the young

I've been asked to pass along the news that April is Financial Education Month.

For the next few weeks, folks from the Philadelphia Federal Reserve Bank and the Pennsylvania Department of Banking will be fanning out to schools, libraries and other locales to stimulate interest in economic learning, particularly among teachers and administrators.

It's a worthy cause, and something of an uphill fight. As Andrew Hill, education adviser at the Philly Fed, told me recently, everyone agrees kids should learn about money and the economy in school. But when budgets and class time are tight, economics often ends up as an elective, or is dropped altogether.

As a result, Americans typically learn about economics like they learn about sex - in patches at home, on the street, and from the media.

That works for some, but if surveys and national studies are any guide, it leaves vast chunks of the population under- or mis-educated about the economic facts of life.

For instance, Hill often asks high school pupils the famous TV question: Who wants to be a millionaire? - then quizzes them on how they think most real millionaires get that way.

Disturbingly often, their answers focus on glamour jobs in sports or entertainment, trust-fund inheritances or simple luck.

And when Hill tells them the truth - that most millionaires are entrepreneurs with ordinary businesses or average folks who simply worked hard, saved and invested smartly - they respond with skepticism or disbelief.

Not all of this can be blamed on the kids. Even when there is some formal economics teaching, it too often is misdirected or poorly designed.

For instance, a lot of schools introduce kids to the financial markets via something called the "stock market game." Kids invest fictional dollars in individual stocks, then follow their progress in the daily market tables.

But as any good investment counselor will tell you, trying to pick individual stock winners is the last thing a small investor should do. Broad-based or indexed mutual funds are the right way for most people to get into the market.

A smart financial-education program would give kids the tools to understand that, and also help them avoid investment fads and emotion-laden financial sales pitches down the road.

But economics learning doesn't - or shouldn't - end with investing and personal finance.

At its core, economics isn't about managing money at all; it's about making choices, balancing risks and rewards, and creating wealth in the broadest sense.

The primary focus, in fact, should be on developing what economists call "human capital" - a fancy term for whatever each of us has to offer the rest.

In my own idealized economics-education program, kids would learn mainly about investing in themselves, and only secondarily about investing in stocks and bonds.

They also would learn that markets and commerce - which for many still carry a bad odor of greed and exploitation - are neither immoral nor amoral, but simply a way for human beings to cooperate with one another as strangers.

If we want to get along with people we'll never meet, competition and trade are the keys. The former spurs us to do our best, and the latter lets the whole world share in the fruits of our effort.

This may be a tall order for one Financial Education Month, but it's still worth thinking about, even after April ends.

And speaking of endings, today's column is the last one for me.

I've been writing in this space for a hair under 10 years. Given the speed at which technology and journalism are changing, that's quite a long run.

So it's time to move on, to a new challenge outside the daily newspaper business. I've had a great ride - a wonderful chance to explore ideas, learn from smart people and communicate with lots and lots of mostly thoughtful readers.

To all of you, and to my editors and colleagues, I will always be grateful.