Share the WealthEmphasizing consumer choice as an economic and personal finance concept
Consumer choice is a key concept in both economics and personal finance. In economics, the term utility is used to describe the satisfaction or enjoyment derived from consuming a good or service. Educators in the Southeast share ways that they teach concepts related to consumer choice and utility.
Unlimited wants, limited resources
Morrow then displays an editorial cartoon by Pulitzer Prize–winning cartoonist Clay Bennett and asks students to explain its meaning. She poses a question about whether "going green" can lead to more jobs. Next, she displays an editorial cartoon by Pulitzer Prize–winning cartoonist Walt Handelsman and asks students to explain its meaning. Morrow concludes the discussion with a reminder that wants are unlimited and resources are limited, and because of this scarcity, choices must be made.
Hennessy then tells students that they are going to use a measurement called a util, developed by economists, to record their levels of satisfaction as they consume additional units of a particular food or candy, such as marshmallows, miniature candy bars, or donut holes. Students rank their satisfaction on a 0–10 scale, with 10 being the greatest level of satisfaction and 0 reflecting an absence of fulfillment. Hennessy distributes pieces of food or candy, one at a time, to each student, giving them enough time to eat, reflect, and record their satisfaction rankings. Each student continues to receive additional pieces as they ask for more, stopping only once there are no more requests for more pieces.
Following the activity, students share their results and discuss their findings. The highest levels of satisfaction came from the first unit consumed, and each additional unit resulted in diminished levels of satisfaction. Hennessy also asks students what choices that they would have made if they had paid for each additional unit consumed.
As the final component of the lesson, Hennessy focuses on the definition of the principle of diminishing marginal utility. This principle, she explains, is another reason for the inverse (downward or negative) slope of a demand curve. She concludes the lesson by having the students give examples of their consumption choices given different price constraints. Hennessy emphasizes that such choices are further evidence of the inherent marginal cost-marginal benefit analysis that the students are utilizing as consumers.
Making informed choices
Students may compile their research results as either a written report or a poster, and the team must make a presentation to the class. Teams are also encouraged to bring product samples as part of the class report and to allow their audience to examine and test the team's observations firsthand. At the end of the presentation, the student audience is encouraged to ask clarifying questions.
Finally, Astuto gives each member of the class a score sheet to evaluate the other presentations in several categories such as providing the required information, researching enough brands, participating as a team, and using quality visual aids. These sheets are also used to grade the audience to ensure that the students are concentrating on the presentations.
Federal Reserve print and electronic resources related to consumer choice include
By Jackie Morgan, economic and financial education specialist, Nashville Branch
February 24, 2010