WHY IS THIS SKILL IMPORTANT?
- Economic decision making helps students focus on making a choice BEFORE it is made
- It helps students be more thoughtful about all the possibilities and consequences before they make a choice
- Making a choice because the benefits outweigh the costs—has life-long benefits
- Considering past decisions using the same thought processes helps to understand why the choice was made, and to critically evaluate whether it was a good one. It can be
- viewed from their perspective at the time
- viewed in hindsight, from your perspective, what would you have done then—or now
USING ECONOMIC DECISION-MAKING MODELS TO BECOME INFORMED DECISION-MAKERS
The 2015 History/Social Science SOL added skills to be emphasized K-12. Skill 1.h includes using decision-making models to make informed decisions; consider the incentives (positive and negative) for making a specific choice as well as the consequences of making that choice.
THREE BASIC DECISION MODELS
- Cost-Benefit Decision Model: To decide whether or not to do something—when the choice is “yes” or “no”
- Cost-Benefit Decision Tree:To help decide between two choices. In essence, it combines two Cost-Benefit models
- PACED Decision Model: Used when there are various options/alternatives but also certain things/criteria that are important to you. Problem; Alternatives; Criteria; Evaluate; and Decision
Which of the three decision models you use depends on whether the question/issue is basically “yes or no;” there are two alternatives or multiple alternatives. Click here for an example of each.
The consequences of choices lie in the future. Using good economic reasoning (like a decision-making model) can help avoid unintended yet predictable consequences. The more students practice the decision-making skill, the greater likelihood it becomes intuitive and they will make more informed decisions or be able to better analyze decisions made by others.