Economist Arthur Laffer might be best known for the Laffer Curve, a representation of the relationship between tax rates and tax revenue, but what he really wants you to know about today is how to explain economics to your kids. Not complicated theories like his curve, but basic concepts about trade-offs, supply and demand and incentives.
That’s why, together with writer Michelle Balconi, he wrote the recently published children’s book, “Let’s Chat About Economics!” Balconi proposed the book idea to Laffer after hearing Laffer speak about economic incentives at the Detroit Economic Club in late 2012. “I was listening and I just really wanted my kids to be there. I said to my husband, ‘We have to talk about this tonight,'” Balconi recalls.
She did just that — and then reached out to Laffer with her idea. With the help of her children, Balconi wrote the stories in the book and then sent it to Laffer for review. “She puts it all in simple, common-sense terms that even I can understand,” Laffer jokes.
The book walks readers through stories and situations they’re familiar with: A trip to a grocery store turns into a discussion about budgeting, scarcity and supply and demand. Readers learn that the price of roses goes up at Valentine’s Day because everyone wants to buy them then. The store manager chimes in with a lesson about the costs of running his business, including taxes and wages.
In another chapter, a child asks her mom why the family can’t head to Florida or California for spring break. The mom explains the expense of air travel and hotel rooms and then challenges her children to figure out how to plan an affordable vacation themselves. They consider various trade-offs, the concept of diminishing returns and opportunity costs, eventually settling on a nearby getaway.
Later, young characters host a yard sale to earn money for a toy they really want, which leads to a lesson in sales taxes and temporary discounts. A glossary in the back also helps young readers (and their parents) keep track of the economic terms used throughout the chapters, which are illustrated by Mary Kinsora.
Balconi, the mother of two kids ages 12 and 14, and Laffer, a grandfather of 11 and great-grandfather of one, are passionate about the need for young people to gasp economics early. “Economics is just about choices that we’re making in life … I like to give children the terminology and the truth, and then there’s not such a big surprise later on,” she says. Even young children can understand the concept that their after-school free time is a finite resource, she adds.
“We live and read and write and breathe economics,” Laffer says. “Everyone does everything in this book all the time,” he adds, from grocery shopping to selecting gifts. The book offers an economic framework and language for thinking about those everyday decisions, he says. “When a concept has a word, it has an existence in a person’s mind.”
While the book is intended for school-age children, even a 1-year-old can start to grasp the concept of choices, Laffer says. “Economics is all about incentives and how you respond to those incentives. Kids live with incentives all the time,” he says.
Balconi says that after reading the book with her children and talking to them more about economics, they’ve begun to recognize those lessons popping up at school. “They’re more keenly aware of what they’re learning in school because we started those conversations at home. If you want to talk about economics, we’ve given you the starter conversation,” she says, adding that she hopes the book helps parents spark frequent conversations about economics with their children, and inspires them to brush up on the concepts themselves.
After reviewing the grocery store chapter, for example, Balconi took her children shopping and talked about the different prices and what was available. “It’s a fun new way to connect with the kids in your life,” she says.
The Laffer Curve itself, which fills graduate-level economics texts, will have to wait for a follow-up book by the duo. Still, the concept of taxes and disincentives are covered in this book, and parents can use it to plant in their kids an early understanding of economics. “All the tools are there,” Laffer adds.
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How Kids Can Learn Economics With a Legend originally appeared on usnews.com
