Monopoly: Childhood Economics

monopoly pic

Picture eight year-old you, gathered around the board of various colors and fake paper money. You just learned multiplication in school and feel you have this whole math thing down pat. This is where you learned five one dollar bills and one five dollar bill amount to the same thing. Where paying hospital fees sucked, and something about funds maturing got you money. This was your first encounter with monetary exchange and shapes how many Americans go on to think about money.

This capitalistic [ad]venture has one purpose; bankrupt all other players. While racing around the 40 square board you buy property, and collect money through rent. Seems easy enough, but when factoring in the random events, backstabbing nature, and competitive drive of individuals, every game results in a different outcome. By compiling real estate assets and developing their value through purchase of houses and hotels, you corner other actors and force them to make actions they may otherwise not have. This shows us some basic principles of game theory, which most likely flies over the head of most 8 year olds. So we must ask, how do all these economic underpinnings seep into the fundamental assessments we carry with us through our adult life?

Well for starters, Monopoly creates the assumption of equal opportunity, this is done through the money afforded to each player at the beginning of the game. This assumption grants the conniving behavior that comes from this game. In real terms this is where many get their capitalistic drive. When an actor acts in its rational interest, it does not usually factor in the negative externalities imposed on other actors. In a Freidman-esque world this assumption would work fine, the problem is society has yet to evolve to this equitable level, leaving many actors out of the picture. Our human nature obviously requires rational thought, but this brings out a perverse version implored by children and adults alike. The detriment to society this brings is inadequate holistic evaluation of our peers, where many frown upon programs such as Affirmative Action and Financial Aid, without comprehending the disparity of situations and opportunities allotted to an individual which in turn create discrepancy in results. We take this cold shoulder approach far too often in our society and in some sense has been fostered since our childhood.

Monopoly also does a great job demonstrating scarcity of resources and opportunity costs. Those 200 dollars for R&R Railroad are a multi facet decision. You must consider if the value of attaining that asset is worth exchanging your limited dollars for and if they are, would you be better off buying a house for one of your properties or completing a monopoly? Monopoly goes further and adds another dimension to opportunity cost. It’s not a single linear decision, after factoring these potential loses and maybe deciding you’d rather expend those funds on another property, the random nature of the game complicates your decision further. Considering if you would even be able to land on the needed property or if you should acquire this asset and use it as a bargaining chip for late game strategical purposes. This teaches children planning and bartering skills. Having the foresight to see that another may eventually need a certain piece to complete their puzzle and being able to assess relative values are valuable skills in decision making.

These aren’t the only influences Monopoly has on our tendencies and economic habits. Sometimes instead of backstabbing, people form alliances and work strategically. It teaches us that we must diversify and not rely on any stream of revenue too heavily. It shows us the value of saving and how at any given moment life could hit you with a major expense. It helps us analyze why people act as they do in the market. There are obvious lapses as well. The game does not account for the creation of money nor does it have any mention of an inflation rate as the rounds progress. The economy in Monopoly is not perfect but none the less, the role it plays as the first encounter people have with money markets help shape the foundation of peoples understanding of economics.

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