Consumers Should Study Up for Political Football Season

The National Football League kicks off its regular season the first week of September, but political football season is already here. And while there are a variety of issues voters, politicians and pundits are focusing on, the granddaddy of them all remains the economy.

The conventional wisdom says people vote with their wallets and that is a simplified – yet fairly accurate – perspective. Politicians routinely “ask” the electorate if they are better off today than they were two, four or however many years ago. Others peruse the latest news from Wall Street as a barometer for the overall economic health of the nation. But no matter how they slice it, it all comes down to how people feel about their personal financial status.

With the advent of information technology and social media, there is no lack of self-styled economic “experts” offering their two cents’ worth – adjusted, of course, for inflation. And while the business community employs more than its fair share of buzzwords from “synergies” to “bandwidth” to “think outside the box” and beyond, economists have their own special set of magic terms to describe things. And that’s where the problem lies.

Americans are spoon fed simple economic terms such as “supply and demand,” “zero-sum game” and “aggregate demand” as if ordinary consumers can see past the jargon and comprehend how the economic models work and what it means for their paychecks. But they don’t really.

With so much economic and financial news hurtling down the information superhighway, it is next to impossible for non-experts to even scratch the surface of the dismal science that is economics. The concepts and theories are expressed in jaw-breaking words and phrases and even the simplest of ideas sound far more confusing than they should. Take for example the concept of supply and demand.

In an explanatory list of common economic terms, the financial publication The Economist defines the term “supply and demand curve” thusly:

One of the earliest illustrations learned by students of economics. Supply increases as the price rises, and demand increases when the price falls (with the exception of some luxuries, known as Veblen goods, and very basic Giffen goods.) The two are displayed on a graph (usually as straight lines, rather than curves) and the point where they meet is the equilibrium price.

The caveats and exceptions in the definition are simple stuff to trained economists and students of economics, but ordinary consumers will be lost pretty quickly. But it sounds good. It has that authoritative vibe of a wise elder explaining the nature of the cosmos to the masses and since it is an abstract theory couched in jargon, it is accepted as revealed truth. And that makes it easy to confuse potential voters.

The solution is that a working knowledge of economics should be part of the basics for students alongside reading and writing and arithmetic. And just like navigating the seemingly endless supply of news – real and fake – purporting to explain the state of the world, average Americans need to learn how to spot economic misinformation and oversimplification.

Understanding some of the fundamental ideas and concepts of economics is a necessary skill to navigate the increasingly complex financial world today. In other words, it’s game time and the clock is ticking.