I’ve got an 11-year-old and a 14-year-old. I’d love for them to have a solid grasp of economics and a heart that loves the Lord. Can you recommend an approach to teaching economics to children in a smart, God-honoring way?
Economics essentially comes down to two simple insights, which is why even children can begin to grasp it.
First, economics begins with the recognition that stuff is scarce. There are limits everywhere. We have only 24 hours in a day to sleep, work, or play. Our bodies have limits in what they can do, what they can take, and how they respond to what we put in them. Limits constrain what we can do.
Second, constraints mean you can’t have it all. If you have $10 to spend at a restaurant, you can get a salad, or a burger, or a sandwich, but you can’t get them all. Spending an hour doing this is not spending an hour doing that. Choosing one thing means not choosing another.
There are tradeoffs. And that means incentives matter.
Tradeoffs and Incentives
Because there is a limited amount of stuff, people can’t get more than there is. If a baker brought 10 loaves to the market, people can’t walk away with 12.
This is the foundation of supply and demand. If there is more produced than people want—or if there isn’t enough—then incentives have to change. In a market, that means the price adjusts. Higher prices induce the baker to bring more loaves to market but also dissuade buyers.
As supply and demand fluctuate, we decide what to do based on the incentives and tradeoffs we face. Incentives are the costs or benefits of doing one thing over another—this might mean the literal price tag, or it might mean how easy or hard or (un)desirable something is.
Behavior often changes because incentives change. My wife and I spend less time doing student ministry now than we did two years ago because we had a third kid (less available time) and COVID happened (so much harder to get together with anybody). What we value didn’t change, but our incentives did.
Understanding constraints is a mark of maturity, which is why the concept is both difficult and vital to teach children. But that’s not all they need to know.
Scarcity in God’s Kingdom
God created a world with limits. We are finite beings, and there are real constraints to being human on this earth. But we recognize that God is not subject to constraints, which means two things.
God created a world with limits. We are finite beings, and there are real constraints to being human on this earth.
First, God does not behave the way we do. We can “waste time” only because we have a finite amount. But if you have an infinite amount of something and you “waste” seven—or 7 million—units, you still have an infinite amount. God can be patient in ways we can’t. God is not subject to scarcity, and so we shouldn’t expect him to prize efficiency or to “respond to the incentives” we perceive. His ways are higher than ours.
Second, because there is no scarcity in God’s kingdom, God can ask us to do things that don’t make sense in a scarce world. God has a way of providing strength when there is none, making his love overflow when we are out, and bringing into being things that are not. When God tells us to do something that goes against our scarcity mindset, it’s because he is able to provide what we don’t have. There is more to God’s economy than we perceive in this world.
Because there is no scarcity in God’s kingdom, God can ask us to do things that don’t make sense in a scarce world.
Understanding human economics can help me predict that when I run low on energy or time, I’m more likely to lose my temper. But understanding God’s gracious economics means I’m not only forgiven, but can ask for his Spirit’s help when I feel depleted so that I won’t lose my temper next time.
It’s important for your children to understand that people’s decisions must all add up to what’s available. They can only spend or save the money they have. They can only do so many activities before needing a break. They can only squeeze so many stuffed animals into their bed at night.
But who gets what, and what they must do to get it, isn’t the same as what should happen. Your son might be able to beat his younger brother to the last doughnut, but that doesn’t mean he should gobble it up without sharing. Your daughter might want to attend several birthday parties at the same time, but that doesn’t mean you should race her around all Saturday. Similarly, the economics of who gets what is not the same as the ethics.
Recognizing that helps us to adjust our choices to line up with God’s economy, and to look forward to a new heaven and new earth filled with abundance.