Nov 12 2008
“Monopoly”: the Game of Life - a guest post by John M. Ostick
Often we need to teach an economic idea that we do not have a thourough, practical understanding of ourselves. The old “Keep it Simple” model is usually the best method with which to conf
ront this dilemma.
The idea of good investment strategies crops up from many angles during any economics class. Households need to make wise choices in spending their disposable income. Business firms need to be efficient in deciding their growth options. The government and the banking sectors have tremendous control on the “values of economics progress.”
One device that has aided me is the use of the accounting Ballance Sheet. Balance sheets are used in essentially all economics textbooks to convey the notion of “How the Banking System Creates Money.” Here’s a good example:
When my son Brian was nine years old, we started playing the Parker Brother’s popular game Monopoly. Both of us began with $1500 in CASH (Diagram 1).
- Items on the LEFT SIDE are things “Owned” - Assets. Notice initially all $1500 is in the form of CASH.
- The RIGHT SIDE contains things “Owed” - Liabilities. (Initially $0)
- Also on the RIGHT SIDE: by finding ASSETS minus LIABILITIES we find NET WORTH.
- The purpose of the game is to increase this NET WORTH.
As the game progressed, Brian’s strategy was to build up his CASH. For the first thirty minutes of the game, Brian had a huge smile on his face. He started to hoard the goldenrod colored $500 bills. Enamored by his cash stash, he even turned in smaller units of monopoly currency for more golenrod bills.
Brian, looking over at my side of the board, even as a nine year old, mockingly tuanted me. He noticed that I “owned” only a measly few white $1 bills, some pink $5 bills, and only one dull yellow $10 bill. Obviously, he thaught that he was winning the game over his dad. Zeroing in only on the CASH, he didn’t observe that I also “owned” three green, red and yellow property deeds. Also, he couldn’t understand the reason whyI had “spent” cash on those nine green plastic houses that were sprinkled around the board.
Our Balance Sheets now looked like Diagram #2. Brians’s strategy was to build his cash holdings. By landing on “PASS GO, COLLECT $200″, “You’ve Won a Beauty Contest, Collect $10″, and similar monopoly situations, Brian’s CASH grew and so did his NET WORTH (modestly).
However, the next thirty minutes were mine (I started to smile and Brian began to cry). As he landed on my “ASSETS” his goldenrod currency flowed my way as RENTAL REVENUE. It didn’t take long for Dad to win by bankrupting his son.
The final Balance Sheets showed the ory details (Diagram #3). Brian’s CASH was now in my possession; however, notice how my strategy of investing in REVENUE-producing assets enabled my net worth to expand. Brian was bankrupt, his net worth was zero.
This simple story has served me very well in both high school and universtiy level Economics and Accounting courses. By the way, Brian is now a 27 year old Emergency Medicine medical resident at Christiana Medical Center, Christiana, Delaware, and has bankrupted me in Monopoly ever since this first learning experience!
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tray and have to decide how many to surrender for, say, Jell-O cubes versus grapes. This first step allowed each capuchin to reveal its preferences and to grasp the concept of budgeting.










