Engineering Economics as a General Education Course to Expand Quantitative and Financial Literacy

This paper presents the case for why engineering economics should be a commonly accepted general education course. Currently, most engineering courses are not considered appropriate for the general education of a college or university student. In the past an engineering economics course focused primarily on financial mathematics; however, the modern engineering economics course centers on financial decision making in addition to financial mathematics. These topics are applicable, if not mandatory, for students pursuing interests in engineering, law, product development, public service, entrepreneurship, marketing, business, finance, political science, sociology, government, and ethics. This issue is timely because schools at various levels (e.g., K-12, community colleges, and universities) are including the concepts of quantitative and financial literacy into their required curricula, with some being required by state law. Motivation and Introduction There is enormous pressure on curricula at public universities from legislatures to reduce the number of credits for graduation, while increasing graduation and retention rates and maintaining a substantial level of general education (or similarly named programs, such as: core curriculum, foundation curriculum, etc.) for the graduate. A reduction in credit hours is particularly difficult for engineering due to ABET accreditation requirements and employer expectations for engineering competency. Typically, the general education of a baccalaureate graduate includes a number of credits in composition, humanities, social sciences, physical sciences, mathematics, and physical education. Engineering courses are not considered appropriate due to the advanced mathematics and science requirements for the courses. However, the argument of this paper is that the current topical coverage of an engineering economics course satisfies the requirements for social and/or behavioral sciences recognition because it provides necessary skills in quantitative and financial literacy with respect to decision making. This argument follows the patterns and urgencies for increasing K-12 standards in mathematics in support of a thriving future science, technology, engineering, and mathematics (STEM) workforce. Other key arguments of note: Economic and social progress is an outcome of engineering change and application. It is estimated that 75-88% of all wealth creation is attributed to the application of technical and engineering change 1-3 . This was originally shown by the Nobel Prize winning, macroeconomist, Dr. Robert Solow 1 and has been verified recently by others 2,3 . Engineers apply and develop science and technology in designing products and systems. Via innovation, engineering design, research and development new technologies will become available to society over time. Understanding the economic characteristics of a technology and its costs is what distinguishes engineering economics from other branches of economics and finance. Engineering economics provides the foundation for making economic choices between competing technologies. Correct application of engineering economics principles to these choices will create new wealth for a society. Engineering economics can deal with the impact of new technology on environmental factors, public policy, and social sustainability. If students want to know the economic logic that has led to better ways of doing things, lower cost, and higher aggregate standards of living, it befits them to know the fundamental principles of engineering economics. This paper also argues that including more engineering courses as general education courses could aid in the recruitment and retention of students who would not have considered engineering as incoming university freshmen. Thus, engineering economics as a general education course could aid in the recruitment and diversity of the engineering student body, and eventually the engineering workforce. This paper is organized as follows. It begins with an overview of the curriculum for social science and engineering education, followed by a literature review involving engineering related to these topics. Based on this foundation, it examines high school initiatives and future workforce initiatives. It concludes with student survey results from an undergraduate engineering economics course (with all students being engineering majors), and then summary remarks. Curriculum Introduction Social Science, as a General Education requirement, is described as 4 : “The goal of the social sciences is to help us understand the way that we live, especially the relation between the individual and the group, sometimes from an historical but often from a contemporary perspective. Vital to the continued health and success of our society is an understanding of the complex individual, political, and social dynamics that make up the modern world. Students should not only have knowledge of the principal concerns of the social sciences, but they should also understand the methods by which social scientists collect and evaluate knowledge.” Engineering, as a discipline, seeks to find solutions that will benefit humanity and the society. The key curriculum attributes of the engineering economics course, as outlined in the following sections, are the application of the decision-making process to a variety of contemporary problems where technology and/or money are objectives or constraints. Consequently, based on these attributes, the course would be suitable for students interested in a wide range of fields including engineering, law, product development, marketing, business, finance, political science, sociology, government, and ethics. Engineering Economics Curriculum One goal of engineering economics is to teach students how to include the time value of money and the time value of technology within the decision making process. The course covers technology issues related to making decisions in today's society. A non-engineering student could be successful in this course and find value in its topics. The knowledge in the course is broad-based to a variety of non engineering disciplines, while it also meets the academic requirements of all engineering majors. For example, the financial mathematics topics are directly aligned with the Fundamentals of Engineering exam, which is necessary for engineers to become licensed within the state and nation. The point critical to broad application is that the core topics of engineering economics can be presented in a way which does not require mathematics above the typical university level. Note, depending on the engineering course objectives and topical coverage of the engineering economy course at a particular university, the current course could be modified to meet general education requirements and still maintain the current engineering course objectives. However, it may be the case that a different version of the course would be offered to satisfy the general education requirements of non-engineering students, and the current course be modified to satisfy the general education requirements and the engineering course objectives. This paper leaves that application to the specific program and individual reader. The key is that the course provides an overview for analyzing decisions from the time value of money and time value of technology perspective for both individuals and organizations. Examples generally draw from a contemporary perspective rather than a historical perspective but touch on topics such as inflation in terms of consumer price indices, product price indices, and the federal minimum wage, which have historical significance. The course covers a wide set of Social Sciences applications: Benefit/Cost ratios, Public Policy Projects, Taxes, Inflation, Bonds, Credit Reports, Investment Pyramid (Return versus Risk), and Ranking Methods. Each of these topics cover issues associated with making a decision. For example, within many public policy projects there are difficulties in quantifying the benefits and costs (which can be more subjective than quantitative), they often have long life horizons (e.g., parks, bridges, roads) which make it difficult to estimate usage, maintenance, etc., disagreements amongst stakeholders (e.g., "Not In My Backyard"), ethical issues (e.g., eminent domain), and financing issues (e.g., taxes versus bonds). After a discussion of the issues and assumptions, methods for collecting and evaluating the required data can be discussed in order to make an informed decision. For assignments and class discussions, students must make a definitive argument explaining the conclusion of the decision (both from the subjective and quantitative perspectives) using the decision making process outlined in class. The examples covered by this course can include important contemporary issues; such as: a discussion as to why Kodak declared bankruptcy in January 2012, and why the United States Postal Service continues to raise the rates for first-class mail. The topics are not restricted to management, accounting, or economics. The overarching topic is decision-making within a broad-based context. Engineering Entrepreneurship Curriculum One of the traditional topics of engineering economics is the time value of money and this integrates well with one of the fundamental topics of entrepreneurship, the time value of technology. Understanding the fundamental concepts of engineering economics and then applying them to the technology innovation field is of great importance for graduates who pursue careers with start-up companies or technology development companies. Many engineering programs have created entrepreneurship curricula, and the implied knowledge of engineering economics is required in order to be successful within those curricula. Linking engineering economics with courses in engineering entrepreneurship is already occurring nationwide in engineering programs. T