Teach Kids Economics and They Will Learn

James D. Laney and Mark C. Schug

How does an elementary teacher go about incorporating “economics” into the classroom? Which teaching strategies work best? Which don’t? In an attempt to answer these and other questions this article provides an overview of recent research on teaching and learning economics in the elementary classroom.1

Can Children Learn Economics?

The answer is: most certainly. As with all subjects, children just need to have a teacher willing to spend time teaching them. Research has indicated that students will learn even better if the teacher has had some special training in what economics is and how it can be taught. Since some beginning economics is normally included in elementary social studies textbooks, it appears that the social studies curriculum is the most appropriate place to introduce economic concepts and reasoning.

Many studies have been conducted over the years that provide evidence that children can learn economics when it is taught. Lawrence Senesh was a pioneer in the development of instructional materials for teaching economics at the elementary level.1 A.G. Larkins and J. P. Shavers’ study of Senesh’s Our Working World materials showed that the economics test scores of first grade students who studied economics were repeatedly and consistently above those students who did not.2 Even at this early level, students appeared capable of understanding economics concepts.

A more elaborate and more recent study by K. Sosin, J. Dick, and M.L Reiser had similar results but added several new findings.3 The experimental groups in this study included seven elementary classes divided between grades three, four, five, and six. The teachers in the experimental groups had special training in economic education and used curriculum materials developed primarily by the National Council on Economic Education for use at these grades. Eleven control groups were used in which students studied no economics. Students in both groups were pre-and post-tested using a standardized test of economics.

Results indicated that students in the experimental groups learned significantly more economics when compared to students in the control groups. The most important variable explaining this student learning was the extent to which economic concepts were taught. Ethnic and income backgrounds made little difference. Students’ gender mattered very little--boys scored slightly higher than girls did. Sosin, Dick and Reiser concluded that “not only can all [economic] concept groups be taught in elementary grades, but third and fourth grade students can apparently achieve post-test scores comparable to sixth grade students in one year of instruction.”4 The evidence seems clear: teach them economics, and they will learn.

Can Children Retain the Economics They Have Learned?

Again, the answer is certainly, but the degree of that retention may depend on the age of the child and the way a concept is taught. In an early study by W. D. Rader and others, using a test administered immediately after instruction and then one year later, elementary students in grades four and five who had received economics instruction had higher scores than those without such instruction.5 Fifth graders retained the economic content they were taught better than the fourth graders.

A more recent study by James D. Laney yielded similar findings.6 Students in grades one, three, and six were taught the same economic concept lessons--one on scarcity and the other on opportunity cost. Both concepts were learned and retained at a high level of mastery by the third and sixth graders. The first graders initially learned both concepts at a high level of mastery, but retention was more problematic for them, especially for the concept of opportunity cost. It should be noted that the instructional approach used in this study by Laney was not experience-based, in contrast to the first-grade lesson described in the box. Students at all three grade levels experienced the economic concepts of scarcity and opportunity cost through hypothetical, vicarious, story-like situations rather than through real-life situations. This factor may account for poorer retention by younger students.

Indeed, Laney found that the younger the child is, the more important it may be to provide first-hand, concrete experiences if the economic concepts are to be learned and remembered.7 In this study, the two groups of first graders were taught the concept of opportunity cost (i.e. what one gives up when making a decision), with individuals in one group experiencing the concept in a real-life way and individuals in the second group experiencing the concept in a vicarious way.

Students in both groups were confronted with producer and consumer decision-making situations. In the real-life experience group, students were shown real objects (e.g., a limited set of art supplies and samples of alternative art objects to make, a limited amount of money and samples of alternative food items to buy) as the producer and consumer dilemmas were described to them. They made real-life, nonhypothetical decisions in response to these dilemmas and then implemented their individual decisions and lived with the consequences.

In contrast, students in the vicarious experience group were presented with illustrations of the real objects described above and experienced the same producer and consumer dilemmas in story form only. The vicarious group made hypothetical decisions and did not implement their individual decisions.

As indicated by the results of an immediate posttest and delayed posttest (six weeks after instruction), both groups appeared to learn the concept of opportunity cost equally well for the short term, but long-term retention was much higher for those students in the real-life experience group.

How Do Children Understand the Economic World?

The child’s view of the social world differs from that of social scientists. For example, Muir found that the child’s geographical view differs from that of the geographer and that children’s historical thinking differs from that of the historian.8 Thus, it comes as no surprise that a child’s thinking about the economic world differs from that of the economist. However, this fact does not stop children from explaining their often ill conceived economic theories to the classroom teacher. Ask a child why some nations are rich and others are poor. The child’s explanation might revolve around the fact that wealthy nations have lots of big, neat stuff—like timber, oil, coal, and iron. In other words, children often believe that nations are wealthy simply because of the natural resources they possess. This view is often subtly reinforced when children study geography, with its emphasis on the importance of natural resources.

A social studies teacher seeking to improve her or his pupils’ economic understanding might point out that a number of nations of the world possess few natural resources but are still well-off, including such countries as Japan, Singapore, and Hong Kong. The teacher could go on to observe that there are other nations with vast natural resources that remain relatively poor, including Russia, Ukraine, North Korea, and many of the nations of Africa.

What explains why some nations are wealthy and others are not? The teacher may wish to demonstrate with classroom activities how the presence of incentives to be productive and the existence of free markets that reward private investment and initiative are extremely important to producing more goods and services. Students successfully learning such lessons would be well on their way to thinking economically.

Several studies have focused on the child’s understanding of various aspects of the economy.9 According to these studies, young children often think that:

> Buying things in shops is a ritual, not an exchange involving profit.

> Work and income are not connected.

> The price tag or size determines price.

> The value of money comes from its color, pictures, size, or serial number.

> Banks are safe places to store money.

> Property is owned by those who are near it.

How Can Teachers Correct Economic Misconceptions?

What is a teacher to do about such economic misconceptions? The easy answer—as stressed earlier—is to include time for teaching economic concepts to your students. An abundance of curriculum materials exist to get the classroom teacher started. They can be obtained from a variety of sources, including the National Council on Economic Education (for treatment of a variety of these resources, please see other articles in this issue).

Teachers can deepen their students’ understanding of economics by assisting them in replacing their intuitive constructions of social knowledge with constructions based on disciplined inquiry. Failing to do so means that naive understandings simply persist and may become more difficult to dislodge later. For example, it is easy to imagine a child correctly completing a test that requires knowing the definition of opportunity cost. It may well be the case, however, that the child has no sense of how to apply the concept in the real world. When asked what is the cost of staying up late to watch television, the child might say there is no cost. Students believe that watching network television is, of course, free.10

What are some suggestions to get children off to a good start in thinking economically? First, the teacher should be aware that a child's understanding of economics is probably not much like the one widely used by economists and expressed in the National Council on Economic Education's Voluntary National Content Standards in Economics. In the case of the child taking the economics test, the child may have still thought that the cost of something is its dollar amount--the price tag. Unfortunately, this thinking is of little help in dealing with opportunity cost, where the task is to demonstrate an understanding that those who choose always give up their second best alternative. Teachers should be aware of the types of misconceptions students are likely to hold.

Second, the teacher should focus students on how the misconception doesn't explain much about the world. Review the correct definition of opportunity cost and provide lots of new examples that illustrate the idea. Practice is important to learning to think economically. Ask, for example, what the opportunity cost of the following might be:

> Sleeping late on Saturday morning.

> Being late to school.

> Buying a fast food meal.

> Owning a puppy.

> Not wearing your eye glasses to school.

> Fighting on the playground.

> Staying up late to watch television.

> Reading a book.

> Going to a movie.

Third, teachers need to make economic learning meaningful and memorable for children. Book-based expository approaches may not be sufficient either; children, especially those in the primary grades, may need real-life experiences with economic concepts in order to make sense out of the new learning. Experience-based instructional approaches can contribute significantly toward this end. To complement the exposure of students to activities that simulate real-life experiences, the teacher may need to focus their attention on the concept to be learned through some more direct form of instruction, such as a teacher-led debriefing session. M. L. Kourilsky has suggested some specific guidelines for employing experience-based economics instruction:11

> Introduce new economic ideas through real-life rather than vicarious experiences.

> Provide students with active rather than passive economic experiences.

> Let students bear the consequences of their economic decisions.

> Use direct, teacher-led instruction to focus students' attention on the economic ideas to be gleaned from their own real-world experiences and to correct economic misconceptions.

> Reinforce experience-based economic learning with vicarious experiences, using role-play, stories, pictures, games, and various cooperative learning tasks.

Fourth, opportunities for teacher-child and child-child communication exchanges relating to economic ideas are highly desirable. As mentioned above, corrective feedback from the teacher is necessary if students are to replace their economic misconceptions with more accurate notions. As in the case study described in the box at the beginning of this article, teacher-led, post-experience debriefing sessions provide a vehicle for delivering this corrective feedback.

These post-experience debriefings also provide for child-child communication exchanges as children role-play and discuss economic ideas and problems they have encountered in real-life situations. In discussing oral language support for early literacy, M. M. Clay asserts that a child learns language by functioning as both a speaker and listener during instruction and play. In struggling to understand and to be understood, the child learns more about language (and, in turn, about the ideas/concepts being communicated).12 Post-experience debriefings give students a chance to talk about economic concepts; together, children struggle toward shared meaning and greater verbal fluency with selected economic ideas.

Finally, sustained effort and involvement with economic topics over a period of days strengthens children's interest, mind-engagement, and subsequent learning and retention of economics. The successful economic learning results achieved by James D. Laney with young primary grade students involved experience-based instruction on a limited number of economic concepts over a six-week period.13


What is the message of this article for classroom teachers? Elementary students, even those in the early primary grades, are capable of learning and remembering economic concepts if they are taught in developmentally appropriate ways. The keys to successful teaching and learning of economics include (1) identifying students' misconceptions about economic ideas, (2) replacing those economic misconceptions with correct ideas using teacher-provided feedback and student practice, (3) making economic learning meaningful and memorable through experience-based instruction, (4) providing for both teacher-child and child-child communication exchanges so that students have the opportunity to gain facility in correctly verbalizing economic ideas, and (5) teaching a few economic ideas for sustained periods over several key points in the elementary curriculum, which gives children time to assimilate basic economic understandings.


1. L. Senesh, Our Working World: Families at Work. (Chicago: Science Research Associates, 1963).

2. A. G. Larkins and J. P. Shaver, “Economics Learning in Grade 1: The USU Assessment Studies.” Social Education, 33 (1969): 955-963.

3. K. Sosin, J. Dick, and M.L Reiser, “Determinants of Achievement of Economics Concepts by Elementary School Students.” Journal of Economic Education 28 (Spring, 1997): 100-121.

4. Ibid.

5. W.D.Rader, et al., Results of the Evaluation Study Conducted in the Viso County Public Schools on the Elementary School Economic Programs (Chicago: Industrial Relations Center, 1967).

6. J.D. Laney, “Experience- and Concept-Label-Type Effects on First-Graders' Learning, Retention of Economic Concepts.” Journal of Educational Research 82, 4 (March/April 1989): 231-236.

7. Ibid.

8. S. P. Muir, “Understanding and Improving Students’ Map Reading Skills.” Elementary School Journal 86 (1985a): 207-216 and S. P. Muir, “Teaching Time Concepts to Young Children.” Paper presented at the National Council for the Social Studies 75th Annual Conference in Chicago (1985b).

9. For a summary of this line of research, see M.C. Schug, “How Children Learn Economics,” International Journal of Social Education 8 (1994): 25-34.

10. Costs associated with viewing TV include not doing homework, being over-tired the next day, lack of exercise, or anything else they might have done with the time they spent viewing.

11. M.L. Kourilsky, Mini-Society: Experiencing Real-World Economics in the Elementary School Classroom (Menlo Park, California: Addison-Wesley Publishing Company, 1983).

12. M. M.Clay, Becoming Literate: The Construction of Inner Control (Portsmouth, New Hampshire: Heinemann Educational Books, Inc., 1991).

13. J.D. Laney, “Can Economic Concepts Be Learned and Remembered?: A Comparison of Elementary Students.” Journal of Educational Research 82, 2 (November/December 1988): 99-105.

About the Author

James D. Laney is a professor and undergraduate program coordinator for elementary education at the University of North Texas. Mark C. Schug is professor of curriculum and instruction at the University of Wisconsin–Milwaukee, where he is Director of the Center for Economic Education.

A Classroom Case Study

Imagine a first grade classroom functioning as a real-world market economy.
The development of this classroom economy can be accomplished using a three-step process.


First, play money in the form of one and five dollar bills is infused into the “economy” by paying students on a daily basis for such things as attending school and for cleaning the classroom at the end of the school day.

Second, in order to set up stores, the students are allowed to purchase a limited number of items (five of a kind for $5) from a “factory warehouse” located in the classroom and operated by the teacher. Products and raw materials for sale at the factory warehouse include such things as pencils, markers, erasers, pads of paper, toys, children's costume jewelry, and miniature play groceries.

Third, the children engage in dramatic play activities within their classroom marketplaces. During each twenty-minute market day, students are free to buy, sell, and produce goods and services. To prevent students from using the factory warehouse as just another store, the teacher opens the factory warehouse only every other market day, and students are limited to one purchase (five of a kind for $5) a day from the factory warehouse. After each market day, the teacher leads an instructional intervention in the form of a post-market day debriefing. Each debriefing follows a four-step sequence suggested by Kourilsky.1

First, the students use their own words to describe and role-play a teacher-selected economic event from their classroom marketplace. A good example for the teacher to choose is one that showed a scarcity of some resource in their classroom marketplace, for example, a certain kind of popular toy.

Second, the students, with the teacher’s help, pinpoint the central issue or problem. In this case, there are fewer units of the toy than the students want. This prepares students to understand that the existence of scarce resources is a relevant issue requiring decisions to be made.

Third, the teacher provides the students with new information about the economic concept(s) of scarcity. To orient students toward the concept, the teacher might ask them to invent their own definition and label for the concept of scarcity, such as “not enough” or “too-few-for-so-many.” The teacher then provides the students with the conventional concept label and definition, making it clear that scarcity refers to the idea of unlimited wants in combination with limited productive resources. The teacher also addresses any misconceptions that the children have about the concept.

Fourth, the instructor aids the students in applying the new information to the current issue. In this classroom, for example, the teacher could help the students investigate the scarcity problem by having them brainstorm possible ways in which scarce goods can be allocated, such as “prices, command, majority rule, contests, force, first-come-first-served, sharing equally, lottery, personal characteristics and others.”2

A recent study by James D. Laney emphasizes the importance of the teacher debriefing following the student activity.3 In his study, one group of transitional first grade students received experience-based economics instruction as described above, complete with both real-life market day experiences and post-market day debriefings. A second group experienced only the market days without the follow-up debriefing sessions, and a third group experienced only the follow-up debriefing sessions without the market days.

On a post-test measuring student understanding of economic concepts that was administered immediately after six weeks of instruction, the group that had both market days and debriefings significantly outperformed the other two. This suggests that real-life experiences with economic concepts provide a strong experiential foundation to which students can attach new economic learning, while debriefings serve to focus students’ attention on economic misconceptions and/or what correct economic ideas can and should be learned from one's experiences. v

1. M.L. Kourilsky, Mini-Society: Experiencing Real-World Economics in the Elementary School Classroom (Menlo Park, California: Addison-Wesley Publishing Company, 1983).

2. National Council on Economic Education, in partnership with National Association of Economic Educators and the Foundation for Teaching Economics, Voluntary National Content Standards in Economics (New York: National Council on Economic Education, 1997), 6.

3. J.D. Laney, “Can Economic Concepts Be Learned and Remembered?: A Comparison of Elementary Students.” Journal of Educational Research 82, 2 (November/December 1988): 99-105.