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The Ledger Federal Reserve Bank of Boston’s Economic Education Newsletter In this issue 1 …Ask a Busy Person 4 U.S. Mint Launches 50 State Quarters Program 5 Productivity: Getting More Out of Something Than You Put Into It 6 “Worth a Thousand Words” 9 Educators’ Update 10 Tool Box 11 A Question of Economics …Ask a Busy Person Boston Chapter of Financial Executives Institute Finds Time for Economic Education by Bob Jabaily Spring 1999 one that was well designed. So, they did what most intelligent people would do: They looked for help. And they found it in the first place they looked – the Boston University School of Education. According to Walt Pressey, Chairman of the FEI Special Events Committee and Executive Vice President and CFO at Boston Private Financial The Boston Chapter of the Financial Holdings, Inc., the timing for a productive partner- Executives Institute (FEI) proves the old adage, “If ship between FEI and Boston University could not you want something done, ask a busy person.” Its have been better. The Massachusetts Board of 1,000-plus members are among the busiest people in Education had decided to require that 15 percent of Greater Boston, yet they always find time to work on the social studies curriculum be devoted to economics issues that make a difference in the world outside and had included economics in its comprehensive their offices. testing of students in grades 4, 8, and 10. Teachers A prime example is FEI-Boston’s long-standing faced the daunting task of teaching something for commitment to economic education – a commitment which many of them had no formal training or mate- that began in the 1970s with summer workshops for rials. Pressey says Boston University recognized the Massachusetts teachers. Over time, the summer problem and was delighted to help. workshops evolved into a comprehensive year-round Under the direction of Dr. Robert Sperber, effort that now includes curriculum development, Professor of Education at Boston University, and Dr. teacher training, a scholarship fund, and achievement Lal Chugh, Professor of Accounting and Finance at awards to recognize the efforts of outstanding stu- University of Massachusetts-Boston and Chairman dents and teachers. of the FEI Academic Relations Committee, the The expanded program began to take shape in 1994, when FEI decided to transform its annual golf tournament from a purely social activity into a FEI/BU initiative focused on three main objectives: 1. Identify existing resources to incorporate into a core economics curriculum; fundraiser to support economic education. Money 2. Develop new curriculum materials for use from the 1994 tournament paid for a multimedia eco- in elementary schools, middle schools, and nomics program developed jointly by the Plan for high schools; Excellence in the Boston Public Schools and teachers 3. Recruit and train teachers to pilot the at Boston Latin School – the oldest and one of the materials at six Boston schools – two most highly regarded public schools in America. FEI and the Plan for Excellence originally in- elementary schools, two middle schools, and two high schools. tended to develop a “grass roots” economic education The project’s ultimate goal was to help teachers program at Boston Latin and transplant it to other implement the FEI/BU curriculum and then test stu- schools. But they hit a snag when they discovered dents to measure the change in their knowledge of that there was not enough academic support for economics. teachers to implement a pre-packaged program, even “The curriculum development model we are The Ledger • Spring 1999 1 The Ledger Bob Jabaily, Editor Research Department Federal Reserve Bank of Boston P.O. Box 2076 Boston, MA 02106-2076 Or phone: (617) 973-3452 This newsletter is published three times a year as a public service by the Federal Reserve Bank of Boston. The reporting of news about economic education programs and the materials contained herein do not necessarily reflect the views of the Federal Reserve Bank of Boston or the Board of Governors. Copies of this newsletter and a catalog of other educational materials and research publications may be obtained free of charge by writing: Publications Research Department Federal Reserve Bank of Boston P.O. Box 2076 Boston, MA 02106-2076 William Swanson (left), CFO of Bose Corporation, and Dr. Lal Chugh, Chairman of the Accounting and Finance Department at University of Massachusetts-Boston, present an FEI scholarship to Nicole Lecuyer. Ms. Lecuyer, a student at Stonehill College, was selected as one of FEI’s “Outstanding Junior Year Students” for 1998. “Through our commitment to economic education,” says Dr. Chugh, “FEI hopes to enhance economic literacy and prepare students to function in the global economic system.” using,” notes Professor Sperber, “was first introduced By early 1999, the FEI/BU initiative had pro- by the Boston University School of Education into gressed to the point where teachers from the pilot the Chelsea schools in the fields of mathematics and project in Boston were reflecting on their experiences e-mail: literacy. Experts develop the first part of the cur- and preparing to expand the program to schools in firstname.lastname@example.org riculum and teach it to other teachers, who try it out Boston University’s Greater Boston Consortium, in their classrooms. These pilot teachers then add which includes Boston, Brookline, Chelsea, Concord, their own instructional lessons and serve as master Lexington, Newton, and Somerville. internet: www.bos.frb.org teachers who teach it to other teachers.” And that is only the beginning. “By expanding Day-to-day executive responsibility for imple- to other schools, we eventually plan to reach thou- menting the objectives and making the project’s goal sands of other teachers in New England,” says a reality fell to Boston University Professor Stephen Professor Sperber. ”And with the help of grants from Ellenwood. Professor Ellenwood assembled the cur- private and government sources, we hope to estab- riculum development team, recruited teachers for the lish a Center for Economic Education at the School pilot program, and directed the teacher training of Education, which can expand economic education classes. Bentley College Professor Colin Young was throughout the nation.” recruited to oversee the project’s evaluation and monitoring components. FEI’s Walt Pressey is firmly convinced that the partnership between FEI and Boston University has yielded rewards to everyone involved. “Initial trepi- building bridges to classroom teachers. dation at the enormity of the task has yielded to a Pressey is also quick to acknowledge the efforts sense of enthusiasm. People have become believers,” of Burdette Johnson and Junior Achievement. he says. Johnson has been a strong proponent of economic ed- Pressey attributes the program’s success, in ucation for most of his 90-plus years, and his 45-year part, to FEI’s “people-to-people” approach. He says involvement with Junior Achievement has helped to FEI tries to forge links to good people who won’t be form the basis for a productive partnership with FEI. frightened by a challenge. One of those people is Cathy Minehan, President of the Federal Reserve Bank of Boston. When Pressey first began to assemble a program evaluation team, he went to the Boston Fed President because he knew she was someone who cared deeply about economic education and also recognized the importance of demonstrating measurable outcomes. “Cathy thought Pressey attributes the program’s success, in part, to FEI’s “people-to-people” approach. He says FEI tries to forge links to good people who won’t be frightened by a challenge. the project sounded like a great idea,” recalls Pressey, “and she suggested that we coordinate our efforts with the Boston The two organizations sponsor a program to recog- Fed’s existing economic education program.” nize outstanding teachers, and FEI members support As a result of the meeting, two Federal Reserve staff members are now contributing their expertise to Junior Achievement’s economic education programs in local classrooms. the FEI/BU project. Sue Rodburg, an Assistant Vice Yet another FEI initiative highlights the President with an extensive background in economic accomplishments of “Outstanding Senior Year education, serves on FEI’s Program Evaluation Students” majoring in accounting, finance, or economics at area colleges and Committee. And Economic Rob universities. “Outstanding Junior Wedge, who was one of Steve Year Students” in those disci- Ellenwood’s standout pupils at plines receive FEI scholarships. Education Specialist In short, the very busy Boston University, acts as primary contact to the Boston Fed’s members of FEI’s Boston economic education program. Chapter are finding time to do the Long-time economic edu- things that make a community cation advocate George Watson more than just a good place to do is another person who has con- business. But as Walt Pressey tributed to the FEI/BU project, points out, they are also getting helping to develop its middle something in return – the satis- school curriculum component faction that comes from knowing and serving as liaison to the they are accomplishing something National Council on Economic worthwhile. “It’s been invigo- Education. Pressey says Watson’s breadth of experi- rating to see that we are having an effect,” says ence has proved enormously beneficial, particularly Pressey with the characteristic understatement of a when it comes to pinpointing useful resources and Boston banker. The Ledger • Spring 1999 3 U.S. Mint Launches 50 State Quarters Program You can learn a lot from looking at the back of a quarter Next time you try to settle a disagreement with rich diversity of their national heritage.” But the flip of a quarter, you could be in for a surprise. The Congress hopes the redesigned quarters will also en- twenty-five-cent piece took on a new look in January courage “young people and their families to collect 1999 when the United States Mint launched its 50 memorable tokens of all the states.” State Quarters Program. Collecting the new quarters will be inexpen- The eagle, which has graced the reverse side sive and hassle-free – no fees or commissions and no of the quarter since 1932, has temporarily left its special ordering. The U.S. Mints in Philadelphia and perch to make way for a series of new designs to Denver will produce them and ship them to the commemorate each of the 50 states. The ten-year Federal Reserve Banks, which will supply them to program began with designs to honor Delaware, banks and thrift institutions throughout the country. Connecticut, and (The new quarters are NOT directly available from Pennsylvania – the first five states to ratify the U.S. the Federal Reserve.) To acquire a complete set of Constitution. It will draw to a close in 2008 with de- the new quarters, collectors need only stay alert and signs commemorating Oklahoma, New Mexico, watch their pocket change over the ten-year life of Georgia, New Jersey, Arizona, Alaska, and Hawaii – the last five states to enter the Union. The 50 State Quarters Program is intended to “promote the diffusion of the program. To find out more about the 50 State Quarters Program, visit the U.S. Mint Web site at www.usmint.gov. knowledge among the youth of the United States about the individual states, their history, geography, and the Delaware The First State Issue Date: January 1999 Delaware honors Caesar Rodney, known for his historic ride to cast the tie-breaking vote in favor of independence. Pennsylvania The Keystone State Issue Date: March 1999 Symbolizing the state’s founding principles, the figure of “Commonwealth” is shown against the outline of Pennsylvania, a keystone, and the state motto. New Jersey The Garden State Issue Date: May 1999 New Jersey honors George Washington, who led the Colonial Army to victory at Trenton. Georgia The Empire State of the South Issue Date: August 1999 The Georgia quarter depicts the famous Georgia peach bordered by oak sprigs and a banner that bears the state motto. Connecticut The Constitution State Issue Date: October 1999 When King James II demanded the surrender of Connecticut’s colonial charter, Captain Joseph Wadsworth hid it inside a majestic white oak. “The Charter Oak” symbolizes Connecticut’s spirit of independence. 4 Spring 1999 • The Ledger Productivity: Getting More Out of Something Than You Put Into It Productivity is usually expressed as a ratio of input to output. Labor hours and cropland are “inputs.” New automobiles and peaches are “outputs.” When people use the term “productivity,” they usually mean “labor productivity” – the output for a given amount of time at work. If, for example, someone figures out how to make a toaster in one hour instead of two, productivity in toasters is said to double. Why does productivity matter? Because our capacity to produce has a major impact on our overall standard of living. The 19th century offers a prime example. New technology and better production techniques during those years led to a rise in industrial output that helped to boost real incomes. Or, to put it another way, workers saw their buying power increase when mass production made more goods available at lower prices. And because their incomes went further, people could gradually afford to work fewer hours. A shorter work week and more stuff at cheaper prices – sounds like a pretty good non-technical definition for “higher standard of living.” Measuring productivity, however, is not an exact Working on Fundamentals When it comes to economics, one of the challenges a teacher faces is identifying the major concepts. The National Council on Economic Education had this concern in mind when it developed A Framework for Teaching Basic Economic Concepts. (Visit the National Council’s web site at www.nationalcouncil.org.) Each issue of The Ledger highlights a Framework concept. The last issue looked at “Opportunity Cost and Trade-offs.” This time, it’s “Productivity.” Excerpts for this piece were taken from: • “Stuck on Productivity,” an article by Susan Schact in the Summer 1992 issue of Regional Review, published by the Federal Reserve Bank of Boston, and • “A Brave New World? The Productivity Puzzle,” an article by Kevin Kliesen in the January 1998 issue of The Regional Economist, published by the Federal Reserve Bank of St. Louis. Both magazines feature well-written, non-technical articles that could form the nucleus of an economics lesson for secondary school students or college undergraduates. For a free subscription, contact: science. A tractor eases the farmer’s burden; a power- apples and oranges,” so you can’t use physical output Subscriptions Regional Review Research Library-D Federal Reserve Bank of Boston P.O. Box 2076 Boston, MA 02106-2076 Phone: (617) 973-3397 Web site: www.bos.frb.org/economic/nerr/regrev.htm to measure productivity among a variety of goods and AND driven loom speeds clothmaking. But pinpointing productivity growth across the economy is a gargantuan task, and official statistics are rough indeed. Strictly speaking, productivity measures physical output for an hour of labor. But you can’t “mix services. Statisticians at the U.S. Bureau of Labor Statistics (BLS) have devised a method to compensate for the problem. They take the dollar value of the economy’s annual output, adjust for inflation, and divide by the total number of hours worked. But nearly everyone would agree that the official productivity Subscriptions The Regional Economist Public Affairs Office Federal Reserve Bank of St. Louis P.O. Box 442 St. Louis, MO 63166 Phone: (314) 444-8809 Web site: www.stls.frb.org/research/order/pubform figure is more of a rough gauge than a precise measure. The Ledger • Spring 1999 5 “Worth a Thousand Words” Anyone who has ever spent time From the Old School The photos on these pages offer a looking at old photos knows how vaguely un- Education is a balancing act. There is glimpse of how schools tried to cope with the settling the experience can be. The people, always a tension between preserving the old educational uncertainties of the 1890s. Shop frozen for all time in a single instant of work and adapting to the new. class, home economics, gym class, and book- or play, have a way of drawing us into their It is a concern that was very much on world. Their eyes look out at us from across the minds of late-19th century American ed- the years, and we can’t help but wonder if ucators. More than sixty years of industrial de- their dreams and fears were at all like ours. velopment and urban growth had drastically “Worth a Thousand Words” uses the altered traditional patterns of living and power of archival photos and prints to take working. Then, as now, public schools did a backward glance at economic life in New their best to prepare students for a world in England. This first installment focuses on which change seemed to be the only constant. keeping – it’s all here for you to see and enjoy. All photos by A.H. Folsom Courtesy of Boston Public Library, Print Department school life in Boston during the 1890s. Student Bank, English High School – 1892 Historian Benjamin Rader notes that, “By 1910 there were eight times as many clerks, professional men (such as accountants, lawyers, and engineers), salespersons, and lower management personnel in corporations as there had been in 1870.” Educators faced the task of preparing students to meet the rising demand for white-collar workers. 6 Spring 1999 • The Ledger Home Economics Class, H.L. Pierce School – circa 1892-93 Shop Class, Dwight School – circa 1892-93 Economic change was beginning to have an impact on gender roles and traditional patterns of living. But the prevailing philosophy of the times still held that a girl should be prepared to manage a household, and a boy ought to be “handy, ” even if he planned to earn his living in an office. Girls Gym Class, Charlestown High School – 1893. The term “couch potato” would not enter the language for another 100 years, but late-19th century Americans worried that urban life and sedentary work were having an adverse effect on health and fitness. EDUCATORS ’ UPD ATE Fed Challenge 99 Winners from Choate Rosemary Hall (L to R) Rory Cahill, Aaron Painter, Lee Bressler, FRB President Cathy Minehan, Katharine Zandy, Dennis Kitt, Ted Newman, and teacher Ted Hartsoe Fed Challenge 99 Economic Education The National Council on Economic Education, a nonprofit partnership of leaders in education, business, and labor, has worked to foster economic education since 1949. EconomicsAmerica, the Council’s teacher training affiliate, provides training and support to more than 120,000 teachers a year. To find out more about the EconomicsAmerica affiliates in New England, contact: Maine Council on Economic Education P.O. Box 9715-159 Portland, ME 04104-5015 Phone: (207) 780-5926 Fax: (207) 780-5282 e-mail: email@example.com Economic Education Council of Massachusetts Bridgewater State College For the second year in a row, students Bridgewater, MA 02325 Phone: (508) 279-6125 e-mail: firstname.lastname@example.org from Choate Rosemary Hall (Wallingford, CT) won the Federal Reserve Bank of Boston’s regional Fed Challenge tourna- Rhode Island Council on Economic Education Rhode Island College Providence, RI 02908 Phone: (401) 456-8037 Fax: (401) 456-8851 e-mail: email@example.com e-mail: firstname.lastname@example.org ment. Rory Cahill, Aaron Painter, Lee Bressler, Katharine Zandy, Dennis Kitt, Ted Newman, and teacher Ted Hartsoe will travel to Washington, D.C. to represent the First Federal Reserve District in the national Fed Challenge competition on May 2-3. If you live outside New England and would like to find out how to contact the EconomicsAmerica affiliate in your area, visit the National Council on Economic Education Web site at www.nationalcouncil.org or write to: EconomicsAmerica National Council on Economic Education 1140 Avenue of the Americas New York, NY 10036 The Fed Challenge is an economic competition for teams of high school students who study current U.S. economic conditions and then present analyses and recommendations for interest rate policy. The students’ work mirrors the work of the Federal Reserve System’s Open Market Committee, which is responsible for U.S. continued on page 12 The Ledger • Spring 1999 9 T O O B L O X years from 1913 to the present But who sits on the and is so easy to use that even committee? How often Facts & Trivia http://www.bep.treas.gov/nptemp1.cfm a technophobe does it meet? What is a won’t have any problems. Just typical meeting like? This site is a bonanza for anyone in- Web Wise #1 Bureau of Engraving and Printing confirmed select the years you want to What does the FOMC terested in money trivia. Here is a sampling compare, dollar focus on, and how does it of what you can learn: amount, click on the “calcu- implement its monetary late” button, and within a policy decisions? Even antique cars on the back of matter of seconds you’re former “straight-A” stu- the $10 note? ANSWER: looking at a number that will dents are a little fuzzy on They are generic old cars help you decide if a car or a the details. – no particular make and burger really was cheaper in • What is the make and model of the model. enter a 1965 or 1949. Sound like you? Fear not. An article in the December 1998 • How long would By the way, the chrome-laden issue of On Reserve, the Federal Reserve it take to spend 10 billion Pontiac that sold for $5,000 in Bank of Chicago’s economic education $1 notes at the rate of 1965 would have cost newsletter, will fill the gaps in your FOMC. one note per second? $25,857.14 in 1998 – and The piece, which is based on a speech by ANSWER: 317 years that’s without the safety Federal Reserve Governor Laurence • What is the features, pollution control equipment, Meyer, begins with background on the his- average life of a $5 and state-of-the-art sound system available tory and structure of the FOMC and then note? ANSWER: 2 years on today’s cars. offers an insightful look at what happens • What is the origin of the “$” sign? ANSWER: Check out the site, and find out for yourself. The site is packed with fun stuff. Web Wise #2 Federal Reserve Bank of Minneapolis “What Is a Dollar Worth?” http://woodrow.mpls.frb.fed.us/ economy/calc/cpihome.html When kids look at a vintage advertisement, they often marvel at the prices. (“Wow! Cars were so cheap in those days.”) But were cars or houses or hamburgers really cheaper way back when? during a typical FOMC meeting. (The Read all about it! “Come with Me to the FOMC, Part I” On Reserve Federal Reserve Bank of Chicago December 1998 newsletter – free subscription When interest rates go up or down, it is usually in response to an FOMC decision. Great! What is the FOMC? The letters stand for Federal Open Market Committee – the Federal “What is a dollar worth?” is a great tool Reserve group that’s respon- for calculating and comparing how prices sible for determining the have changed over the years. It covers the course of monetary policy. 10 Spring 1999 • The Ledger Spring 1999 issue of On Reserve completes the story with “Come with Me to the FOMC, Part II – The Decision.”) For a free subscription to On Reserve, write to: On Reserve, Public Affairs Department, Federal Reserve Bank of Chicago, P.O. Box 834, Chicago, IL 60690-0834, or check it out online at http://www.frbchi.org. A Question of E c o n o m i c s The kids are savvy enough to know that strong demand coupled with a short supply usually signals a price increase, and higher prices usually serve as an incentive to increase production. So why did Furby’s manufacturer, Tiger Electronics, keep the toy’s retail price at $29 when frantic parents would have paid much more? And why didn’t the company make a larger quantity? The nature of the toy business holds part of the answer. More than fifty percent of all toy sales are squeezed into the fourth quarter – October, November, December – so toy manufacturers face a tough choice: 1) set production levels high and risk being stuck with a big unsold inventory, or 2) set conservative production levels and risk not A Question of Economics focuses on questions related to economics in everyday life. Anyone can submit a question – students, teachers, anyone at all. And the question need not be complicated. In fact, the more it pertains to daily life, the better. Send your questions to: Robert Jabaily, Editor The Ledger Research Department Federal Reserve Bank of Boston P.O. Box 2076 Boston, MA 02106-2076 E-mail: email@example.com FAX: (617) 973-3957 “Why did the company that made Furbies charge only $29 and make only a very limited number of them? What were they trying to accomplish?” having enough toys to sell during the holiday season. One of the ways they decide on production levels is by going to the Toy Fair. Every February, more than 1,600 manufacturers, distributors, importers, and sales agents from 30 countries make their way to New York for the American International Toy Fair. By the time the fair ends, people in the toy trade have a pretty good idea Let’s start with a little background information for anyone who spent December which toys will be hot for the holidays. continued on page 12 1998 on another planet. Furby is a toy that speaks a dialect all its own – Furbish – and has the programmed capability to If we use your question, we’ll send you a bag of shredded money for each person in your class (limit 35). “learn” English. Not only that, but it is cute, too. Cuddly technology at an affordable price – no wonder Furby was the The question in this issue comes from Ms. hottest selling toy of the 1998 holiday Florence Poor’s fourth graders at the Hastings shopping season and the source of high School in Lexington, Massachusetts. parental anxiety. By Thanksgiving, the furry little chatterbox was so scarce that desperate parents were patrolling cyberspace in search of “black market” Furbies. Which brings us back to the questions from Ms. Poor’s fourth graders. The Ledger • Spring 1999 11 Fed Challenge 99 continued from page 11 monetary policy. A Question of Economics continued from page 11 Based on reactions at the 1998 Toy meet the holiday demand. Twenty-one high schools fielded Fair, Tiger Electronics had a strong hunch Nor did raising prices make much teams in this year’s First District Fed that Furby was going to be a winner. The sense at that point because Furby had all but Challenge competition. The five that made company decided to produce more than two disappeared from store shelves. The risk of it to the regional finals were: Buckingham, million units, which, according to the Toy losing customer goodwill probably out- Browne & Nichols School, Cambridge, MA, Manufacturers of America, is actually on the weighed the monetary gain from a mid-hol- Choate Rosemary Hall, Wallingford, CT; high side for a toy that is new to the market. iday season price increase – especially since Hopkinton High School, Contoocook, NH; More than two million units should Tiger Electronics had precious few Furbies Lewiston High School, Lewiston, ME; and have been enough, but Furby turned out to Winchester High School, Winchester, MA. be a bigger phenomenon than anyone could Besides, the affordable price is what have predicted. The toy hit the market in helped to make Furby popular in the first left to ship. September 1998, and by mid-November place. At $29, parents were able to buy more parents were staging all-night vigils in toy than one – if they were lucky enough to find store parking lots. Of course, by then there the little critters. was not enough time to boost production to The Ledger Research Department Federal Reserve Bank of Boston 600 Atlantic Avenue P.O. Box 2076 Boston, MA 02106-2076 Change Service Requested First Class U.S. Postage Paid Boston, MA Permit No. 59702