Economic education is not a luxury

"I'm almost 18 and have no idea about taxes, rent or insurance. But I can write a poetry analysis. In 4 languages". This tweet was written in 2015 by a then 17-year-old schoolgirl from Germany. It sparked a debate that even reached government circles. Anyone looking at the current curricula this year will be disappointed, of course. Not much has changed since then.

Knowledge can save lives. We are currently experiencing how the natural sciences are regaining importance. Even adults are re-reading what they have long forgotten - or never learned. Because if you want to understand the coronavirus pandemic, you need to know what viruses are, what exponential growth means and how statistics work. If you want to form an opinion on the subject of vaccinations, you need to understand what an mRNA vaccine can do. And perhaps a good economic and financial education may not be quite so important. But a basic understanding of rents and property, taxes and debt, as well as interest and inflation, can still have a noticeable impact on your quality of life.

However, a survey conducted by Prof. Bettina Fuhrmann, Head of the Institute for Business Education at the Vienna University of Economics and Business Administration, among children in the fourth grade shows serious shortcomings in pupils' understanding of economics: six out of ten children believe that higher minimum wages could lead to lower unemployment. Six out of ten are also of the opinion that the state decides what is imported and exported in this country. Many young people, including adults, hardly know what interest, compound interest and financial products are.

Well, some of you might say, is that really a problem? Of course it is. It makes a difference whether you put 20 euros in a piggy bank for your children every month for thirty years or invest in ETFs, i.e. exchange-traded funds, with an average return of 9 percent: 7,200 euros versus 38,800 euros. The principle of exponential growth applies to financial matters just as it does to a pandemic. But only those who know something can make good decisions. And money, as no one will seriously deny, creates room for maneuver.

This also applies beyond financial education. Without basic economic education, it is not possible to classify political promises and projects: Are they realistic and likely to achieve what we want? If "those at the top" promise to spend more and cut taxes at the same time, then you have to know that today's deficits are tomorrow's taxes. And anyone who demands that a tax on companies should be used to finance expenditure elsewhere must be aware that such taxes are usually passed on to them, the consumer. Economic education also helps us to understand what is happening in the digital world: social media platforms that offer "free" services earn their money from data and advertising. A good general education also includes the realization that there is no such thing as "free".

Many researchers, including Prof. Fuhrmann, as well as interest groups, banks and entrepreneurs have long advocated a separate subject "Economics" in schools. This solution would create more space to teach the subjects of economics and finance much more comprehensively than is currently the case. Critics of this idea see the danger of "neoliberalization". What is needed, they say, is not an economics subject, but "joint further work for a pluralistic, socially contextualized economic education" (Christian Fridrich, Der Standard 7.10.2020). It remains unclear what this could look like in concrete terms, but it is at least welcome that this should also be done in a pluralistic way. In fact, there is often no question of pluralism in school textbooks today - not because of too much "market fundamentalism", but on the contrary: the economy and the market are sometimes presented in a very one-sidedly negative way and sometimes even garnished with technical errors: for example, in the book "Geospots" you can read that globalization has increased poverty worldwide - the fact is that global poverty has been falling drastically for decades. Moreover, you will find the campaign term "neoliberalism" in several dozen places, without any further explanation of what is actually meant by it. In other books, such as "Durchblick" for 3rd grade, the concept of inflation is incorrectly explained to children. This would in fact be a real argument against developing economics as a separate school subject: more books could be written that reinforce the ignorance that already exists.

Anyone who has not understood how the economy works will always feel at the mercy of "the system". They will not be able to move within it in a self-determined way, shape it or act - they will have a tool in their hands that they do not know how to use. A good, balanced economic education as part of the basic education for all children and young people during compulsory schooling is therefore not an elitist demand, but one that should enable the generation of our children to participate, to have opportunities for advancement and development, in short: a life as responsible citizens.