Excel program for running the Middle School Bank in the personal finance simulation. As you can see, I'm creating an account for my student, Inigo Montoya.
To get students a little more familiar with personal finance, we’re doing a little bank account simulation, and I created a little Excel program to make things a little easier.
It’s really created for the class where students can come up to the bank individually, and the banker/teacher can enter their name and print out their checks as they open their account.
Excel program for running the Middle School Bank in the personal finance simulation.
The front sheet of the spreadsheet (called the “Bank Account” sheet) has three buttons. The first, the “Add New Account” button, asks you to enter the student’s name and it assigns the student an account number, which is used on all the checks and deposit slips. The other two buttons let you delete the last account you entered, and reset the entire spreadsheet, respectively.
One of Inigo's checks (number 4).
Once you’ve created an account the spreadsheet updates the “Checks and Deposit Slips” sheet with the student’s name and account number. If you flip to that sheet you can print out eight checks and five deposit slips, which should be enough to get you through the simulation. The checks are numbered and have the student’s account number on them.
There are two other sheets. One is the “Checkbook Register”, which is generic and each student should get one, and the other is called “Customer Balances”. The latter is set up so you (the teacher) can enter all the deposits and withdrawals the students make, and keep track of it all on the same page.
Yes, it’s a bit of overkill, but I though that, since I was going through the effort, I should probably do a reasonable job. Besides, it gave me a chance to do a little Visual Basic programming to keep my hand in. While I teach programming using VPython (see this for example, but I’ll have to do a post about that sometime) you can do some very interesting things in Excel.
My students are playing SPENT (previous post), and some of them have figured out how to easily make it to the end of the month even while living in poverty. Unfortunately, lots of moms are going without crucial medication.
At least this will contribute to a nice discussion of ethics and morality.
Velasquez and other, (2010) have a nice explanation of “What is Ethics?“.
Ethics is two things. First, ethics refers to well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues. … Secondly, ethics refers to the study and development of one’s ethical standards. … feelings, laws, and social norms can deviate from what is ethical. So it is necessary to constantly examine one’s standards to ensure that they are reasonable and well-founded.
While the Stanford Encyclopedia of Philosophy has a great definition of morality:
The term “morality” can be used either
1. descriptively to refer to a code of conduct put forward by a society or,
— 1. some other group, such as a religion, or
— 2. accepted by an individual for her own behavior or
2. normatively to refer to a code of conduct that, given specified conditions, would be put forward by all rational persons.
—Gert (2008): The Definition of Morality (The Stanford Encyclopedia of Philosophy)
In fact, given how difficult it is to win the game without making some hard moral choices, a couple very interesting questions for a Socratic dialogue would be,
“Can someone survive in poverty while living ethically?”
and, to follow up,
“Does this push poorer people into being unethical and immoral, and towards crime?”
I’m curious to see where a dialogue might lead, especially if it leads back to our discussions of wealth distribution.
Poster by Brian Moore (2009) (click image for his Flickr page).
Next year we’ll be looking at (and creating) propaganda posters when we study 20th century conflicts. Brian Moore has a wonderful set of adaptations of WWII posters for WWIII.
Inspired by the 2009 Iran election protest and activism and censorship therein, the WWIII Propaganda Posters were conceived as a mostly playful statement on wartime, citizen journalism, censorship, and how they all play with the advent of the Internet.
If economics ultimately boils down to the study of human behavior, and our students are ultimately human (stick with me for a second here), then economic theory ought to be able to inform the way we teach. In fact, I’d argue that constructivist approaches to education, like Montessori, work for the same reasons that free-markets outperform highly-centralized command economies: freedom (within limits) better maximizes human welfare. I think this applies both to students in aggregate (the entire student population), and to the individual student also, though you probably have to aggregate over time.
What do I mean by Economics
As a study of human behavior economics differs from psychology, sociology and the other social sciences primarily because it uses money as a metric. This gives it a lot more data to play with. The last century has clearly demonstrated the advantages of the “invisible hand” of the free-market over highly-centralized command economies in providing for the broader public good. So what lessons from the study of economics can we apply to education?
To be clear, I’m not suggesting that we should be treating our schools and classrooms as businesses. We’re not trying to maximize profits for a firm (via test scores or however else that might translate to education), we’re trying to maximize the welfare of our students, which I take to mean, helping them achieve their full potential.
Command-and-Control
As we’ve seen in our studies of economics, flexible, market-based approaches are much better (more efficient) at achieving goals that the command-and-control, dictatorial model. The evolution of EPA’s approach to regulating pollution is an excellent example of how a federal agency learned to employ the experience of economics to better achieve a public good.
The Cayahoga River on fire in 1952. Image from United Press International via NOAA.
In the 1960’s and 70’s, rivers catching on fire, smog, and books on the invisible consequences of pollution, like Silent Spring, inspired the environmental movement and spurred the creation of the Environmental Protection Agency (EPA).
The EPA’s job was, and is, to enforce the laws that reduce pollution and protect environment. In the beginning, they did this by telling industry and companies what to do: the EPA mandated strict limits on the emissions from factories; and power plants were required to install the “best available technology” to reduce pollution. These approaches sound good, and are certainly necessary for pollutants that are dangerous to places close to where they are emitted, but they can be expensive, encouraging people to look for loopholes in the rules so they also become expensive to enforce.
You get the same problems with long, detailed lists of rules in the classroom. Students try to circumvent the letter of the law, rather than adhere to the spirit of the rules. “No iPods allowed,” is forced to evolve into “No Personal Electronic Devices.” Then come the questions, “What about watches?” and, “What about iPads?” so more rules need to be added to the list. By the end of the week you’re approaching a list of rules approaching the length of the tax code, and still adding more.
In the case of environmental regulation, to deal with this type of problem, the field of environmental economics emerged. Environmental economists try to figure out how to achieve the pollution reducing outcomes that everyone wants in the most economically efficient way possible. More efficiency means lower costs to society. They found that there are usually quite a number of ways to achieve the environmental objectives, using the principles of the free market, that are much more efficient than the command-and-control approach the EPA had been using.
Economists like to use mathematics. There are lots of supply and demand curves, and lots of derivatives, which tend to force some over-simplification (in much the same way that your textbook supply and demand curves are almost invariably straight lines). However, sometimes simple models can lead to a better understanding of how people in societies work.
Cap and Trade
Trees believed to have been killed by acid rain. Image via Wikimedia Commons.
In the 1980’s coal burning factories and power plants were churning out a lot of pollutants. One of these, sulphur dioxide (SO2) would react with rainwater and to create sulphuric acid, which would fall as acid rain. Acid rain was a huge problem because lots of plants and animals living in lakes, streams and forests were finding it hard to adapt to the increasing acidity of their environment. Furthermore, more acidic rainwater was damaging the paint on people’s cars and dissolving limestone statues and buildings.
So the EPA implemented a Cap and Trade program. They had a good idea of how much SO2 was being released into the atmosphere, and they know how much they wanted to reduce it by, so they started to issue companies permits to pollute.
The trick was that EPA would only give out permits equal to the total amount of SO2 emissions they wanted, and every year they would reduce the amount of permits until they reduced the pollution enough to resolve the acid rain problem.
Now all the companies that polluted SO2 had to either buy a permit or stop polluting. If they could easily reduce their pollution, a company might have extra permits that they could sell to a company that was having a harder time. In theory, some companies could even buy up permits from other companies and increase their pollution. But since the EPA was only giving out so many permits, whatever happened the total SO2 pollution was still going down.
Doing it this way let the EPA set the goals and let the market for pollution permits allocate how the actual pollution reduction got done. Since the permits could be sold, this encouraged the companies that could easiest reduce their pollution to do so, resulting in a reduction in pollution at the lowest cost.
It also meant that companies were now starting to pay for the environmental damage they were doing. Acid rain is a regional problem so it’s hard to say that your pollution from your factory in Ohio is specifically causing the acid rain here in my forest in Vermont. The atmosphere was being treated as a common dumping ground.
Cap and trade is not without its problems, however, at least in this case, it worked extremely well.
The Innate Desire to do the Dishes
Montessori believed that children have an innate desire to learn. We’ve seen how easily praise and rewards can damage that internal drive. I have, however, found it hard to identify my student’s innate desire to do the dishes. They may want a clean environment, they may have been trained since pre-kindergarten to clean up after themselves (restore their environment), but their is quite often a reluctance to doing it themselves.
Classroom jobs market.
The relationship to the pollution issue is startling to think about at first, but really the issues are the same. After struggling for quite a while to get everyone to do their classroom jobs, recognition of the parallel between my job and the EPA’s lead me to thinking about creating the Job Market Trading Board. Students can trade jobs and when they do it, but in the end, the jobs get done. I remain impressed at how well it has worked.
The basic principle is more general though: set the goals and let the students figure out the best way to accomplish them.
iCivics.com has an interesting set of online games that simulate the different branches of the U.S. government. It comes highly recommended by our local geography specialist.
“I think it’s my new addiction,” he said, “iCivics instead of Call of Duty.”
With recent hopes of democracy and a new renaissance of the Islamic world, it’s perhaps appropriate to look back at the contributions that came from Muslim lands. This includes works in the fields of optics, ecology, engineering, algebra, mostly done in the years between 800 and 1250 A.D.. David Beillo has a wonderful slideshow in Scientific American.
In 1647, when Johannes Hevelius published his treatise on the moon, he placed Muslim scientist Alhazen on the frontpiece (left) to represent reason. (Image by Jeremias Falck via Wikimedia Commons).
After going through the free-market part of the economic system simulation, the least wealthy people –the students who ended up with the least kilobucks— staged a socialist revolution.
Cell phone used to incite the counter-revolution.
Well the most wealthy students were not too happy with that, because the revolutionaries confiscated all their wealth, assigned them all jobs (to simulate a command socialist economy), and started paying everyone equally. One student, assigned to produce food, produced a chicken, a cookie, and a dead socialist. She got sent to jail.
Fortunately, for her at least, she was able to get hold of a phone that had been left lying around from the market part of the simulation, so she sent a simulated text to her fellow former oligarch to try to start the counter revolution. She got a return text:
The return text.
It’s nice to see that our time spent talking about Egypt has not been wasted.
Using the actual U.S. wealth distribution data from Norton and Arieli (2011; pdf), I created a little addendum to our exercise on the distribution of wealth.
I started with the definition of wealth. Students tend to think you’re referring to annual income, so I gave the example of someone who does not have a job but owns a house; they have no income but some wealth in the value of the house. Alternately, someone who has $2 million in the bank, but owes $4 million, actually has negative wealth.
Then I drew a little stick figure diagram to represent the population of the United States. With ten figures, paired up, that gives five parts, aka quintiles.
Breaking the population of the U.S. into five parts (quintiles) based on wealth. The least wealthy are to the right and the most wealthy are to the left.
Students were then presented with an empty bar graph and asked, “How much of the U.S.’s wealth is owned by the wealthiest 20% of the population?” Instead of asking in percentages (as are shown in the graph), I asked them to assume that the total wealth in the U.S. is $100 trillion.
Population with empty bar graph.
The first suggestion was $35 trillion, which is shown below. Others offered different amounts, ranging up to $50 trillion. Someone even suggested $15 trillion, which is not possible, since that would mean that the wealthiest 20% have less than 20% of the total wealth of the country.
If the wealthiest 20% owned 35% of the wealth of the U.S. the graph would look like this.
Once they got the idea, I showed them what the graph would look like in an idealized socialist country, where everyone had the same wealth.
An even (socialist) distribution of wealth.
Finally, I asked my students to fill in what they believed to be the actual case for the U.S. for all five quintiles. The results had to add up to $100 trillion. They gave me their numbers individually before we broke up our meeting, and I entered it in the U.S. distribution of wealth spreadsheet to produce a graph.
After lunch, I showed them the results.
Students' beliefs about the distribution of wealth in the U.S. (S1 through S10 and the average student response), compared to an equal distribution and the actual distribution (bottom).
For dramatic effect, I hid the last two bars at first. We talked over their numbers, then I showed them the equal distribution case (which they’d seen before), and finally the actual distribution.
Actual U.S. distribution of wealth. Data from Holder and Arieli (2011)
The response was salutary; a moment of surprised silence and then whispers. What then followed was a nice, short discussion. I pointed out the pie charts showing the U.S. versus an equal distribution, versus Sweden and asked what they would do, if they were an autocratic monarch, or if they were the president to make the U.S.’s distribution more equal.
How wealth is shared in the U.S. compared to and equal distribution (middle), compared to Sweden. Image adapted from Norton and Aireli (2011).
We talked about the government just taking private property, like the communists did. Then we talked about progressive taxation. We ended by talking about the estate tax, and meritocracy, which we’d touched on in the morning.
I thought the exercise worked very well. Not only did we get into an interesting economic issue, but got some practice with math and interpreting graphs too.
